Lawson makes medicine foray

       Japan's No.2 convenience store chain Lawson Inc said it would jointly open stores with drugstore operator Matsumotokiyoshi to take advantage of deregulation and seek growth in a mature market.
       The alliance comes less than three months after Japan loosened regulations on the sale of most over-the-counter drugs, paving the way for cold medicines and aspirin to be sold at convenience stores around the country.
       "We have been wanting to sell medicines, and there have been strong requests by our customers," Lawson chief executive Takeshi Niinami said at a news conference yesterday.
       Lawson has been looking for new store formats in a saturated market of more than 42,000 convenience stores nationwide. It has been emphasising a need to lure the older generation and also open grocery-style stores.
       It and Matsumotokiyoshi, Japan's largest drug store chain, said they planned to open stores from next year that will stock over-the-counter drugs and cosmetics in addition to convenience store mainstays such as boxed lunches and bottled drinks.
       Niinami said that he would like to have 1,000 such stores in five years,and added that Lawson also plans to sell medicines at 500 of its stores within the next two years with the help of Matsumotokiyoshi.
       But some analysts said they did not expect the drug store alliance to give an immediate boost to Lawson's earnings.
       "I don't see either merits or drawbacks for Lawson in one or two years' time," said Junichi Kanamori, a retail analyst at Mitsubishi UFJ Securities.
       Kanamori said given the scale of Lawson, which has about 9,500 stores, the new stores with Matsumotokiyoshi "are unlikely to have a significant impact soon."
       Matsumotokiyoshi shares ended almost flat at 2,305 yen after jumping as much as 7.6% after the market open,while Lawson rose 2% to 4,110 yen,underperforming a 3.4% rise in the benchmark Nikkei average.
       Matsumotokiyoshi had been in talks with several major convenience store chains for a business partner as it braces for greater competition in the $12 billion market after deregulation of over-thecounter medicine sales earlier this year.
       "Competition with non-drug store players is likely to intensify," Matsumotokiyoshi CEO Namio Matsumoto told the news conference.
       The government has introduced less rigorous qualifications for selling most over-the-counter drugs, which only licensed pharmacists had been previously allowed to sell, enabling supermarkets and other retailers to offer medicines without the expense of hiring pharmacists.
       Seven & I, which runs supermarkets,and rival Aeon Co Ltd are trying to expand their drug sales by taking advantage of the new deregulation.
       In the convenience store sector, topranked Seven-Eleven, a unit of Seven &I, and No.3 FamilyMart Co Ltd have also started selling drugs at some stores.
       Analysts said, however, that not many convenience stores would be likely to sell drugs given their limited store space and the sales volume needed to justify the labour costs of qualified sales staff,who are paid more than regular parttime workers.