LEAN PHARMACY PRICE WAR SEEN COOLING

A price war in Chile's retail sector, which has been ongoing since August last year, now appears to be cooling. Although Chile's three leading chains admit that the heightened competition has increased sales, forcing many smaller pharmacies to close, the impact of consumer promotions has begun to hit results.

Cruz Verde, which was among the first major chains to offer Monday-only 30% price discounts, has reported a strong increase in sales volume and a 6% rise in market share between January 2004 and February 2005. However, as consumers have become increasingly accustomed to the discounts, rival chain Ahumada now plans to offer smaller discounts across the week.

Meanwhile, local market watchers have suggested the short-term gains may have actually damaged branding and consumer loyalties across the sector. Despite this claim, the future of lower-cost drug sales in Chile seems assured, especially in view of the government's enthusiasm for lower-cost generic medicines, in contrast to Chileans' traditional preference for branded products.