Moroccan Competition Council warns of pharmacy sector under economic pressure

The Moroccan Competition Council has warned that around 4,000 pharmacies in the country are at risk of closure due to economic and financial difficulties, even as official figures on closures remain unavailable.

The council highlighted the fragile state of the wholesale drug distribution model, despite the continued growth in turnover among distributors between 2016 and 2024.

According to the council’s report on competition in Morocco’s pharmaceutical distribution sector, turnover for wholesalers rose from MAD 9.68 billion in 2016 to MAD 16.26 billion in 2024, while net profits remained low and volatile. Profit margins increased slightly from 0.13% in 2016 to 0.15% in 2024, signaling persistent structural weaknesses affecting the sector’s sustainability.

The council cited several factors undermining profitability:

• Pricing and compensation model: Wholesalers’ margins are tied to drug prices rather than actual costs, failing to reflect rising expenses such as fuel and labor. Operating costs increased by about 36% between 2020 and 2024, while drug prices fell consecutively.

• Inventory costs: Wholesalers must maintain a safety stock covering one month of the previous year’s sales and 80% of licensed medicines. Average stock turnover was about 2 months and 10 days between 2022–2024.

• Payment delays: Distributors face payment periods of 81 days with manufacturers and 97 days with pharmacies, creating cash flow pressure, while 90% of pharmacies have annual turnover below MAD 2 million.

The report compared Morocco’s system with European models, noting that countries like Belgium, Germany, Spain, and Portugal use a dual compensation model that combines a fixed per-unit fee with a percentage margin. Morocco, in contrast, relies solely on a margin ranging from 2% to 11% of drug prices, without fixed per-unit compensation.

Pharmacy operations are also tightly regulated: only licensed pharmacists may own and manage pharmacies, opening requires administrative authorization, and territorial rules impose a minimum 300-meter distance between outlets.

Morocco had 14,134 pharmacies in 2025, with 14,191 registered pharmacists, yielding a near 1:1 ratio of pharmacists to pharmacies. Despite rising total turnover, from MAD 11.12 billion in 2016 to MAD 13.53 billion in 2024, profitability declined, with professional income margins falling from 10.3% to 8.9% over the same period.

The council highlighted the sector’s high concentration, noting that 70% of pharmacies generate under MAD 1.2 million annually, 20% between MAD 1.2 million and 2.5 million, and only 10% exceed MAD 2.5 million.

The report concludes that the combination of rising operational costs, regulatory constraints, low profit margins, and payment delays places significant economic pressure on Morocco’s pharmacy sector, threatening the viability of thousands of outlets nationwide.