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In low- and-middle-income countries (LMICs), private pharmacies play a crucial role in the supply of medicines and the provision of healthcare. However, they also engage in poor practices including the improper sale of medicines and caregiving beyond their legal scope. Addressing the deficiencies of private pharmacies can increase their potential contribution towards enhancing universal health coverage. Therefore, it is important to identify the determinants of their performance. The existing literature has mostly focused on pharmacy-level factors and their regulatory environment, ignoring the market in which they operate, particularly their relationship to existing public sector provision. In this study, we fill the gap in the literature by examining the relationship between the practices of private pharmacies and resource shortages in nearby public health facilities in Odisha, India. This is possible due to three novel primary datasets with detailed information on private pharmacies and different levels of public healthcare facilities, including their geospatial coordinates. We find that when public healthcare facilities experience shortages of healthcare workers and essential medicines, private pharmacies step in to fill the gaps created by adjusting the type and amount of care provision and medicine dispensing services. Moreover, the relationship depends on their location, with public facilities and private pharmacies in rural areas performing substitutive caregiving roles, while they are complementary in urban areas. This study demonstrates how policies aimed at addressing resource shortages in public health facilities can generate dynamic responses from private pharmacies, highlighting the need for thorough scrutiny of the interaction between public healthcare facilities and private pharmacies in LMICs. [ABSTRACT FROM AUTHOR]