The Internet Pharmacy 46 th AESGP Annual Meeting Dubrovnik 2010

Transcription

1 The Internet Pharmacy 46 th AESGP Annual Meeting Dubrovnik 2010 by James W. Dudley Tel Fax Source: OTC Distribution in Europe 2010 edition web site:

2 Agenda Factors influencing Change in Medication Delivery New Competitive Model for European Pharmacy Channels Internet and Mail order Pharmacies Germany Internet and Mail Order Pharmacies - Threat or Promise Conclusions Source: OTC Distribution in Europe 2010 edition 2

3 Factors influencing change in medication delivery Future Channel Strategies Regulation changing the law New entrants New Channels Healthcare provider commitments economics and capabilities Innovation and Technology Transfer Supply chain existing competitors and economics Changing patient/ consumer needs, demographics, choices, experiences and expectations (cost, convenience, privacy and advice) Healthcare provider commitments economics and capabilities Supply chain existing competitors and economics James Dudley OTC Distribution in Europe Pharmacy Lobby Patient/ consumer needs, choices, experiences and expectations Antimonopoly Agents (European Commission) 3

4 Factors influencing change in medication delivery Future Channel Strategies Regulation changing the law New entrants New Channels Healthcare provider commitments economics and capabilities Innovation and Technology Transfer Supply chain existing competitors and economics Changing patient/ consumer needs, demographics, choices, experiences and expectations (cost, convenience, privacy and advice) Healthcare provider commitments economics and capabilities Supply chain existing competitors and economics James Dudley OTC Distribution in Europe Pharmacy Lobby Patient/ consumer needs, choices, experiences and expectations Antimonopoly Agents (European Commission) 4

5 Factors influencing change in medication delivery Innovation and Technology Future Channel Strategies New entrants Changes to regulation Conflicting influences of pharmacy lobby and European Commission New entrants New Channels Regulation changing the law Innovation and Technology Transfer Changing patient/ consumer needs, demographics, choices, experiences and expectations (cost, convenience, privacy and advice) Healthcare provider commitments economics and capabilities Supply chain existing competitors and economics Healthcare provider commitments economics and capabilities Supply chain existing competitors and economics James Dudley OTC Distribution in Europe Pharmacy Lobby Patient/ consumer needs, choices, experiences and expectations Antimonopoly Agents (European Commission) 5

6 Factors influencing change in medication delivery Innovation and Technology Future Channel Strategies New entrants Changes to regulation Conflicting influences of pharmacy lobby and European Commission New entrants New Channels Regulation changing the law Innovation and Technology Transfer Changing patient/ consumer needs, demographics, choices, experiences and expectations (cost, convenience, privacy and advice) Healthcare provider commitments economics and capabilities Supply chain existing competitors and economics Healthcare provider commitments economics and capabilities Supply chain existing competitors and economics James Dudley OTC Distribution in Europe Pharmacy Lobby Patient/ consumer needs, choices, experiences and expectations Antimonopoly Agents (European Commission) 6

7 Factors influencing change in medication delivery Innovation and Technology Future Channel Strategies Channel strategies at different levels in the supply chain and moving at different paces across Europe New entrants Changes to regulation Conflicting influences of pharmacy lobby and European Commission New entrants New Channels Regulation changing the law Innovation and Technology Transfer Changing patient/ consumer needs, demographics, choices, experiences and expectations (cost, convenience, privacy and advice) Healthcare provider commitments economics and capabilities Supply chain existing competitors and economics Healthcare provider commitments economics and capabilities Supply chain existing competitors and economics James Dudley OTC Distribution in Europe Pharmacy Lobby Patient/ consumer needs, choices, experiences and expectations Antimonopoly Agents (European Commission) 7

8 Agenda Factors influencing Change in Medication Delivery New Competitive Model for European Pharmacy Channels Internet and Mail order Pharmacies Germany Internet and Mail Order Pharmacies - Threat or Promise Conclusions Source: OTC Distribution in Europe 2010 edition 8

9 Dispensing alone is no longer a sustainable economic retail model - to compete pharmacies need to brand their offer, get closer to consumers and reduce economic and logistical inefficiencies 9

10 Pharmacy Channel Strategies Trend towards Groupings Main international distributors forming pharmacy chains in selected markets - Celesio, Alliance Boots, Phoenix, Mediq, Polska Grupa Farmaceutyczna (PGF) Limited sized wholly owned groups sucking out economic inefficiencies - e.g. Germany recovery in pharmacy numbers and economic performance James Dudley OTC Distribution in Europe Reductions in State owned pharmacies CEE and Sweden New entrants - Major International retail groups entering the pharmacy sector Leclerc, Carrefour, Auchan, Penta, Tesco, Sainsbury, WalMart. A.S Watson etc. Restrictions on wholly owned groupings in Europe s largest markets Over half of chain owned pharmacies are located in the UK 10

11 Virtual Chains Reinforcing Competitive Position of Independents Over a quarter of Europe s pharmacies are members of voluntary chains Strengths of a chain, benefits of independent management Branding, buyer power and patient/consumer services Largely driven by main pharmacy distributors: Celesio James Dudley OTC Distribution in Europe Phoenix Alliance Boots Polska Grupa Farmaceutyczna (PGF)- Poland Galenica Switzerland Hungaropharma - Hungary Major players embracing B2C Technologies 11

12 Agenda Factors influencing Change in Medication Delivery New Competitive Model for European Pharmacy Channels Internet and Mail order Pharmacies Germany Internet and Mail Order Pharmacies - Threat or Promise Conclusions Source: OTC Distribution in Europe 2010 edition 12

13 Internet and Mail Order Pharmacies bind the concept of discount home shopping into a virtual world through the technology of the Internet - but there is still a major mail order cross over (Internet businesses provide catalogue mail, telephone and fax access and traditional mail order providers offer Internet access) 13

14 Internet and Mail Order Pharmacies The Proposition Customer services are a combination of electronic and manual processes (physical goods have to delivered) Target audiences often comprise of special interest segment s older (+40) need or seek discounts, seek privacy and convenience Health insurers tie in (USA) or capture repeat prescriptions through incentives and bonuses (fiercely attacked in the courts in Germany) The main players identify and target key audiences and use discounts to stimulate purchase but the main marketing drive is building customer loyalty 14

15 What s Driving Internet and Mail order Pharmacy Technology transfer and entrepreneurial pioneers ( ) - Pharmacy2U 1999 rewrote UK law and kicked off the pure play Internet pharmacy - DocMorris challenged German laws banning distance marketing in ECJ and won! Specific audience and patient segment needs, experiences and fulfilment - Patients with chronic, debilitating and often embarrassing conditions seeking cost savings, convenience and privacy - Consumer segments seeking specific non-prescription healthcare tonics, prostrate remedies, circulatory products and pain relief Websavy consumer groups used to shopping on the Internet Health insurance provider Model - PBM influence USA - Mediservice Switzerland 1996 first to make contracts with statutory health insurers in Europe - Main Internet and mail order pharmacy players signed up statutory health insurers in Germany Main pharmaceutical distributors strategies to market directly to consumers/patients: - Celesio, Alliance Boots, Polska Grupa Farmaceutyczna (PGF) etc 15

16 DocMorris ECJ Decision 2003 The European Court ruling in favour of DocMorris has had a profound change in the government attitudes towards distance selling of pharmaceuticals across the region. In effect the Court has ruled that distance selling of prescription only medicines can only be prohibited on the grounds of public health safety and not for the protection of the local pharmacy monopoly. The court found no reasons for prohibiting sales of OTC medicine through the Internet and mail order pharmacies. James W. Dudley OTC Distribution in Europe 2010 edition 16

17 Legal Status of Internet and Mail Order Pharmacies - Europe ECJ ruling opens doors for Internet and mail order for non-prescription medicines and healthcare Netherlands, Poland, Switzerland and UK become key Internet and mail order markets after Germany France, Italy and Spain laggards in terms of regulation, entrepreneurial drive and consumer participation James Dudley OTC Distribution in Europe the 2010 edition 17

18 Participation by the Major Pharmaceutical Distributors Celesio operates three mail order businesses Lloydspharmacy in the UK, Vitusapotek in Norway and DocMorris in the Netherlands and Germany In the UK Boots (Alliance Boots), Rowlands (Phoenix) and other retail chains have comprehensive online pharmacies Polska Grupa Farmaceutyczna (PGF) in Poland - Doz.pl PGF uses its 2,000 Apteki dbam Zdrowie affiliated pharmacies to provide the delivery service for both OTC and prescription medicines. Galenica and Apotheke zur Rose operate the largest direct to customer prescription businesses in Switzerland 18

19 What are Internet and mail Order pharmacies? Pure play online pharmacies Portal driven pharmacy co-operatives and franchise chains Independent sites Pharmacy chains home delivery services Non-pharmacy channel partnership Pick-up-Points James Dudley OTC Distribution in Europe 2010 edition 19

20 Examples of Different Internet Mail Order Pharmacies Pure play online pharmacies Portal driven pharmacy cooperatives and franchise chains Pharmacy chains home delivery services Non-pharmacy Pickup points Internet Web Site Internet Web Site Internet Web Site Internet Web Site Catalogue Catalogue Catalogue Catalogue Telephone/Fax Telephone Call Centres Home delivery by mail or courier James Dudley OTC Distribution in Europe Collect at affiliate pharmacy Order in store or Call Centres Home delivery by mail or courier Home delivery by pharmacy Order in store or Call Centres Collect at Pickup point 20 Home delivery by mail or courier

21 Top Spot Players - Germany, Switzerland, Netherlands Primary European pharmacy mail order market is Germany Other major players include leading Germany businesses Mycare, Aliva, Vitalsana Apot zur Rose and Mediservice represent almost 80% of Swiss mail order pharmacy market Top UK pure player is Pharmacy2U ( 17 million) Top Polish player is Doz.pl ( 3 million) James Dudley OTC Distribution in Europe 21

22 DocMorris building the Multi-Channel Brand DocMorris the largest Internet Mail Order Pharmacy in Europe founded in 2000 Sales double in 2004 following legalisation of distance selling of pharmaceuticals in Germany Brand awareness at 40% in 2009 (latest is 60%) Acquired by Celesio in 2007 Development of pharmacy franchise in Germany (currently 150 outlets) Rollout to Ireland and Sweden DocMorris International Pharmacy Channel Brand Germany Ireland Sweden GfK

23 Agenda Factors influencing Change in Medication Delivery New Competitive Model for European Pharmacy Channels Internet and Mail order Pharmacies Germany Internet and Mail Order Pharmacies - Threat or Promise Conclusions Source: OTC Distribution in Europe 2010 edition 23

24 Germany Internet and Mail Order Pharmacy James Dudley OTC Distribution in Europe Internet Mail Order Pharmacies represent a little over 3% of the German retail healthcare market Non-prescription OTCs represent 41% of Internet Mail Order Pharmacies sales and prescription medicines 32% (IMS). IMS Health/BVDA

25 Non - Prescription Internet and Mail Order in Germany James Dudley OTC Distribution in Europe Internet and Mail Order pharmacies represent around 8% of the German Non-prescription Market Sector grew +30% in 2009 according to IMS Health Biggest categories are pain relief, cough cold, digestive remedies and pain relief IMS Health 25

26 Germany Non-prescription Categories Purchased by Mail Order Important categories for Internet and Mail Order healthcare shoppers are tonics, circulatory products, NRT and pain relief IMS Health 26

27 Germany - OTC Healthcare Buyers - Age Profile by Channel 2010 Axel Springer AG, Bauer Media Group Internet and mail order shopper profiles are different to those of pharmacy, druggist and discounter shoppers 27

28 Germany OTC Healthcare Buyers Mail Order v Internet 2010 Axel Springer AG, Bauer Media Group Analysis of consumer access by Internet or Mail Order shows different age profiles Internet user profile 20 years to 59 years = 86% of all Internet shoppers At 60 years plus user profile is lower than sample Mail order user profile 30 to 69 years = 80% of all mail order shoppers 28

29 Germany - Leading the European Internet & Mail Order Pharmacy Market Almost 3,000 German pharmacies have applied to run a mail order business (since 2004) Between 300 and 500 are to varying degrees active 60 dispatch more than 1,000 packages a day (average order = 19.0) 10 companies have achieved more than 20 million turnover ServiceBarometer AG Forschungsauftrag Leading players have formed their own trade association Federal Association of German Mail-order Pharmacy (BVDVA) 29

30 Agenda Factors influencing Change in Medication Delivery New Competitive Model for European Pharmacy Channels Internet and Mail order Pharmacies Germany Internet and Mail Order Pharmacies - Threat or Promise Conclusions Source: OTC Distribution in Europe 2010 edition 30

31 Internet and Mail Order Pharmacy Threat or Promise Internet /mail-order pharmacy is a: Paradigm change for medication delivery (Internet/mail order pharmacy industry) Plague on patients, pharmacists and prescribers (Pharmacists and manufacturers) Economic, private and convenient way of accessing prescription and OTC medicines (Various consumer/patient studies) 31

32 Agenda Factors influencing Change in Medication Delivery New Competitive Model for European Pharmacy Channels Internet and Mail order Pharmacies Germany Internet and Mail Order Pharmacies - Threat or Promise Conclusions Source: James Dudley: Mail Order and Internet Pharmacy in Europe 32

33 Brand Management Perspective Internet creates a transparency both at a national and international level Discovery of very specific target audiences with special needs and experiences Concentrated assortment and private label for non-prescription categories e.g. Germany: - DocMorris reports own brands with 15% to 20% market share - IMS Health reports that while 100 top brands achieve a third of mail order sales it takes 200 in pharmacy sales Definitions of threats and opportunities need to be made on a brand by brand basis 33

34 Conclusions Internet and mail order pharmacies have exposed the differences in legal restrictions, prices and product availability between EU member states and also countries outside the EU Clarification of the legal position of Internet pharmacies resulting from the DocMorris case has already produced the catalyst for expansion for online trading in pharmaceutical products especially in Germany and de-restricted mail order vending of non-prescription products Pace of adoption is greater in some States e.g. Germany, Switzerland, UK, CEE etc. compared to others such as France, Spain and Italy Different Internet mail order retail models are evolving but are moving in the direction of multichannel retail brands 34

35 About Mail Order and Internet Pharmacy in Europe 2012 edition A Study of Mail Order and Internet Pharmacy in 17 European Countries plus key Learnings from the USA. This is the second edition of the only strategic marketing report describing the emerging trends for mail order and Internet pharmacies in Europe s main markets together with comparisons to developments in the USA. Mail Order and Internet Pharmacy in Europe is an important report that not only explores the development of an emerging channel; it draws on studies of the US market to show how the channel has evolved and describes how leading retailers are integrating online technologies using PCs, Tablets, Notebooks and Mobile Apps into the creation of a powerful multi-channel pharmacy experience. 35