Source | Qingyan Recently, Yixintang, a well-known listed pharmacy chain, stated on its investor interaction platform that it will add beauty and other categories in some stores and plans to complete 'pan-health' (mainly including beauty, personal care, mother and baby categories) adjustments in 70% of its stores by 2027. According to Yixintang's latest financial report, as of September 30, 2025, it had 11,230 direct-operated stores nationwide. Does this mean the cosmetics industry has gained another channel covering over 10,000 stores? Before the 10,000-store adjustment, Yixintang had already laid out its beauty strategy. Official website data shows that Yixintang originated in Yunnan in 1980, formerly known as Yunnan Hongxiang Pharmaceutical Co., Ltd. On November 8, 2000, Yixintang Pharmaceutical Group Co., Ltd. was formally established and listed on the A-share market in July 2014, becoming the first direct-operated pharmacy chain enterprise in the A-share market. Today, Yixintang has developed into a comprehensive health platform enterprise integrating pharmacy retail, biomedicine, and medical care services. Screenshot from Yixintang financial report It is understood that as a nationally renowned pharmacy chain, Yixintang's stores are mainly distributed in the southwest region, with over 10,000 stores, and its operating revenue exceeded 10 billion yuan as early as 2019, making it one of the leading enterprises in the pharmacy chain field. The author noted that Yixintang's layout in the beauty field did not start recently. As early as November 2020, Yixintang opened its first 'drug + cosmetics' store in Hainan, with cosmetics as the core category. According to public reports, the store has a full range of categories, from skincare, hair care to beauty, and introduced more than ten beauty brands such as Winona, Kefumei, and Boleida. It also divided into Korean cosmetics and domestic cosmetics sections, with cosmetics-related products accounting for 60% of the store's total products. According to public financial reports, since the establishment of the pan-health segment (including beauty, personal care, health food, and mother and baby) in 2021, Yixintang's business in this area has continued to grow. In 2023, Yixintang's pan-health category sales reached 370 million yuan, with beauty accounting for 60%; in 2024, pan-health category sales grew 29.3% year-on-year, with beauty accounting for 55.6%. Thus, in 2024, Yixintang's pan-health category sales were 478 million yuan. Based on this, Yixintang's beauty category sales in 2023 and 2024 were 222 million yuan and 266 million yuan respectively, showing continuous growth. Screenshot from Yixintang financial report It is worth noting that against the backdrop of Yixintang's total revenue increasing only 3.57% in 2024, the high growth rate of 29.3% in the pan-health category, with beauty as the core, significantly outpaced the overall growth, indicating that it has become an important growth driver for the company. This may be an important reason why Yixintang is actively promoting the transformation from traditional drug retail to a 'professional services + pan-health ecosystem'. According to public information, Yixintang will promote the transformation and reconstruction of existing stores, and future category flagship stores will increase beauty, personal care, and other categories by one-third to meet customer needs. This strategy also provides opportunities for more beauty brands to enter. The author noted that this year Yixintang has significantly strengthened cooperation with beauty brands. Yixintang's official Weibo shows that during this year's 'Double 11' period, it conducted joint live-streaming marketing activities with Chando and Winona. In addition, on November 29, Yixintang announced a strategic cooperation with Proya, with Proya's star products entering for the first time. Screenshot from Yixintang Weibo Photo taken by the author at a pharmacy chain's beauty and personal care sales area The author learned that most products sold in pharmacy chains are medical device dressings, with prices concentrated in the 100-300 yuan range. Cosmetics products are mainly sunscreen, face cream, and eye cream, with fewer other categories. Moreover, most products belong to brands that laid out OTC channels early, such as Winona, Kefumei, Fuerjia, and Zhanyan, with a small portion being pharmacy private labels. According to multiple pharmacy sales staff, 'currently, the best-selling products are medical device dressings from various brands and products with 'repair' effects.' On one hand, some pharmacies allow the use of personal medical insurance balance to purchase medical device products, which is more attractive to customers. On the other hand, this sales status also confirms pharmacy customers' pursuit of 'efficacy' attributes. This statement is consistent with Tu Lijuan's views at the '2025 Offline Trends Link Conference'. 'Skin problems rank in the top 3 among national health concerns, and efficacy skincare has become a core growth category in the OTC industry.' Tu Lijuan believes that in the future, if other beauty brands enter this channel, they also need to position around 'efficacy'. Lack of talent, product homogeneity: OTC channel is not easy to do well However, beauty brands entering the OTC channel is not an overnight process. This year, many beauty brands have entered the OTC channel, possibly related to policy support and encouragement. In August 2024, the Beijing Medical Products Administration issued the 'Guiding Opinions on Further Strengthening the Standardized Management of Drug Retail Enterprises and Improving the Quality of Pharmaceutical Services (Draft for Comments)', which mentioned 'allowing drug retail enterprises to apply for operating cosmetics within the approved business area according to law.' However, the author noted that when the final version of the opinion was released, the content encouraging pharmaceutical enterprises to carry out diversified services was deleted. In November of the same year, the Ministry of Commerce and six other departments jointly issued the 'Implementation Plan for the Retail Industry Innovation and Upgrading Project', which clearly proposed supporting retail pharmacies to 'lawfully carry out sales of non-drug products and related health services.' However, the specific legal provisions for pharmacies to operate cosmetics still need further clarification. Some legal professionals have publicly expressed opinions on the legality of pharmacies selling cosmetics, stating that 'if a retail pharmacy has obtained a business license and its business scope includes cosmetics wholesale/sales/retail, it can sell cosmetics,' but they also pointed out that policies vary by region. There are also reports that due to medical insurance regulatory policies, some cities in Guangdong, Hebei, Jiangxi, and other provinces have issued documents prohibiting designated medical insurance retail pharmacies from displaying and selling cosmetics. This inconsistency in local policies creates a regulatory gray area. In addition to regulatory factors, the shortage of professional talent is another major challenge for beauty brands entering the OTC channel. An industry insider pointed out sharply, 'The OTC channel is not a low-threshold market; it requires strong professional capabilities in competition. Enterprises need to establish an independent operating system for the OTC channel, requiring cross-industry composite talent.' Mei Hexiang, founder of skincare brand Chapter 14, once publicly stated that 'although there is sufficient talent in the OTC channel, composite talent with experience in both beauty and pharmaceutical industries is scarce.' In this regard, a beauty industry headhunter also revealed to the author: 'There are very few such talents in the market. To compete for talent, companies are offering increasingly high salaries.' The shortage of talent directly affects brands' market strategies. Some brands, when entering the OTC channel, lack an 'internal brain,' leading to disconnection from product selection to operational strategy. According to public reports, Gao Chunming, chairman of Freda Biotech, pointed out difficulties at the 2025 Wuzhen Health Conference. Some pharmacies, in order to quickly seize the market, blindly introduce a large number of homogeneous products, resulting in messy shelf displays and making it difficult for consumers to identify and decide; most stores still remain at the initial stage of SMS promotions, with a large number of dormant users not activated and lacking precise outreach based on health data. At the same time, many brands still choose to enter with medical device dressing products. In this regard, Tu Lijuan also publicly stated, 'Currently, this category is approaching saturation in pharmacies, and in the future, we may no longer consider adding highly homogeneous device categories.' Despite challenges such as unclear regulations, talent shortages, and product homogeneity, the market prospects for the OTC channel remain broad. It is evident that the huge store networks of pharmacy chains (such as Yixintang, Dashenlin, and Yifeng, all with over 10,000 stores) provide beauty brands with considerable physical touchpoints. At the same time, some pharmacies are beginning to transform into 'care' places, which helps shift customer mindset from 'passively solving health problems' to 'actively investing in health and beauty,' creating a more natural consumption scenario for beauty sales. Driven by both policy support and channel transformation, and through the joint efforts of brands and pharmacy chains, the OTC channel is expected to become an important growth engine for the cosmetics industry.