Shanghai's largest drug-store chain is vowing to wage war against an upstart discount outlet that has quickly grabbed a noticeable slice of market share by selling generic drugs at discount prices.

　　Shanghai Huashi Pharmacy Co Ltd said yesterday it is adjusting its strategy in reaction to the new com-petition from newcomers.

　　At the end of last month, Nanchang-based Kaixinren Drug Store opened its first local shop on the city's eastern outskirts, where it sells medicines at discounts of up to 45 percent. The shop targets low-income neighborhood customers.

　　As buyers lined up at Kaixinren to stockpile on the cheap products, nearby Huashi outlets and other stores saw a drastic sales decline.

　　"We will take back what we have lost," said Zhu Huijiang, general manager of Shanghai Huashi Pharmacy. While Zhu called a press conference to announce the company's new plans, he refused to provide much information such as how many customers the chain has lost and exactly what changes Huashi would make in reaction to the competion.

　　"The invasion of Kaixinren prompted us to recognize the needs of residents with weak purchasing power," he said.

　　Zhu did hint that Huashi would be adjusting its product portfolio by adding more low-end remedies.

　　The firm also dropped a hint that it may give discounts on some products. The drug retailer said it has already been providing up to 10 percent discount to "some patients in poor condition" since 1999, a policy it admits was poorly publicized.

　　"We have to be very careful in the battle. Otherwise, more of our outlets will suffer losses," Zhu said.

　　The company's marketing executives described the profit margin for China's drug retailers as low, averaging 0.76 percent.