This paper examines recent developments in the pharmaceutical retail trade in socialist Ethiopia and presents the results of two surveys on pharmacy utilization in Addis Ababa. Surveys were carried out in 6 private and 5 government pharmacies. Objectives are: (1) to examine drug retailer utilization in relation to locational, transportation and retailer-related factors; (2) evaluate the role of socioeconomic factors in pharmacy and drug utilization; and (3) determine distance decay associated with clients' trip origins and the location of their residences as indicators of service areas. Although most clients originated in Addis Ababa, large numbers came from rural areas, especially in the pharmacies near large markets and other shopping areas in the inner city. Centrally located retailers also served more Addis Ababa residents and larger sections of the city than peripherally located retailers, largely due to a combination of urban structure, distribution of health care facilities, prevailing drug shopping behavior and population distribution. Government pharmacies had larger service areas and served larger numbers of clients than private pharmacies, primarily due to lower prices and greater availability of pharmaceuticals. Mean distance from pharmacies to places of origin of trips was smaller than mean distance from pharmacies to residences of the same clients. Similarly, distance decay gradients were steeper for the former than the latter in the 4 pharmacies studied in the second part of the survey, indicating the greater suitability of origin of trip as a parameter of service area. Type and price of drugs purchased were associated with socioeconomic factors, particularly level of education and housing/environmental health conditions in two districts, but there was little variation in the small number of drugs purchased per client. Several forms of drug-purchasing behavior of pharmacy clients and selling practices of private retailers are described as adaptive responses to prevailing economic and sociopolitical conditions. The study concludes that population-based studies of disease occurrence and health behavior are needed to better evaluate the health needs of the population for the planning of additional drug retailers in Addis Ababa's suburban districts.