mail order and internet pharmacy aesgp presentation james dudley

by James W. Dudley

Tel. ++ 44 1562 747705Fax ++ 44 1562 750275e-mail [email protected]

web site: www.james-dudley.co.uk

The Internet Pharmacy46th AESGP Annual Meeting

Dubrovnik 2010

Source: OTC Distribution in Europe 2010 edition

www.James-dudley.co.uk © James Dudley International Ltd 2010 218 April 2012

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 inEurope 2010 edition

www.James-dudley.co.uk © James Dudley International Ltd 2010

Factors influencing change in medication delivery

318 April 2012

Future Channel Strategies

New entrants –New Channels

Regulation –changing the law

Innovation and Technology

Transfer

Pharmacy Lobby

Healthcare provider

commitments economics and

capabilities

Patient/ consumer needs,

choices, experiences and

expectations

Supply chain existing

competitors and economics

Antimonopoly Agents

(European Commission)

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



418 April 2012





Transfer

Pharmacy Lobby

Healthcare provider


capabilities



expectations



Antimonopoly Agents








518 April 2012





Transfer

Pharmacy Lobby

Healthcare provider


capabilities



expectations



Antimonopoly Agents






New entrants

Changes to regulation

Conflicting influences of pharmacy lobby and European Commission




618 April 2012





Transfer

Pharmacy Lobby

Healthcare provider


capabilities



expectations



Antimonopoly Agents






New entrants






718 April 2012





Transfer

Pharmacy Lobby

Healthcare provider


capabilities



expectations



Antimonopoly Agents






New entrants




Channel strategies at different levels in the supply chain and moving at different paces across Europe


Agenda




Germany


Conclusions



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


Pharmacy Channel Strategies – Trend towards Groupings

1018 April 2012


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

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


Virtual Chains – Reinforcing Competitive Position of Independents

1118 April 2012


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

Phoenix

Alliance Boots

Polska Grupa Farmaceutyczna (PGF)- Poland

Galenica – Switzerland

Hungaropharma - Hungary

Major players embracing B2C Technologies


Agenda




Germany


Conclusions



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)


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


What’s Driving Internet and Mail order PharmacyTechnology transfer and entrepreneurial pioneers (1999 – 2003)

- Pharmacy2U 1999 – rewrote UK law and kicked off the “pure play” Internet pharmacy- DocMorris 2000 – 2003 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


DocMorris ECJ Decision 2003

1618 April 2012

“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


Legal Status of Internet and Mail Order Pharmacies - Europe

1718 April 2012

James Dudley OTC Distribution in Europe the 2010 edition

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


Participation by the Major Pharmaceutical Distributors

1818 April 2012

• Celesio operates three mail order businesses Lloydspharmacy in the UK, Vitusapotekin 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 Zdrowieaffiliated 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


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


Examples of Different Internet Mail Order Pharmacies

2018 April 2012

‘Pure play’ online pharmacies

Portal driven pharmacy co-operatives and franchise

chainsPharmacy chains home

delivery servicesNon-pharmacy Pickup

points

Internet Web Site Internet Web Site Internet Web Site

Catalogue Catalogue Catalogue Catalogue

Telephone/Fax Telephone

Call Centres Order in store or Call Centres

Order in store or Call Centres

Home delivery by mail or courier Collect at affiliate pharmacy Home delivery by mail or

courier Collect at Pickup point

Home delivery by pharmacy Home delivery by mail or courier

Internet Web Site



Top Spot Players - Germany, Switzerland, Netherlands

2118 April 2012

Primary European pharmacy mail order market is Germany

Other major players include leading Germany businesses Mycare, Aliva, Vitalsana

Apot zur Rose and Mediservicerepresent almost 80% of Swiss mail order pharmacy market

Top UK pure player is Pharmacy2U (€17 million)

Top Polish player is Doz.pl (€3 million)



DocMorris building the Multi-Channel Brand

2218 April 2012

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

International Pharmacy Channel Brand

Germany

Ireland

Sweden

DocMorris

GfK 2009


Agenda




Germany


Conclusions



Germany – Internet and Mail Order Pharmacy

2418 April 2012

IMS Health/BVDA 2009


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).


Non - Prescription Internet and Mail Order in Germany

2518 April 2012


Internet and Mail Order pharmacies representaround 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


Germany Non-prescription Categories Purchased by Mail Order

2618 April 2012

Important categories for Internet and Mail Order healthcare shoppers are tonics, circulatory products, NRT and pain relief

IMS Health


Germany - OTC Healthcare Buyers - Age Profile by Channel

2718 April 2012

2010 Axel Springer AG, Bauer Media Group Internet and mail order shopper profiles are different to those of pharmacy, druggist and discounter shoppers


Germany OTC Healthcare Buyers – Mail Order v Internet

2818 April 2012

Analysis of consumer access by Internet or Mail Order shows different age profilesInternet 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

2010 Axel Springer AG, Bauer Media Group


Germany - Leading the European Internet & Mail Order Pharmacy Market

2918 April 2012

ServiceBarometer AG – Forschungsauftrag

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

Leading players have formed their own trade association

Federal Association of German Mail-order Pharmacy (BVDVA)


Agenda




Germany


Conclusions



Internet and Mail Order Pharmacy – Threat or Promise

3118 April 2012

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)


Agenda




Germany


Conclusions

Source: James Dudley: Mail Order and Internet Pharmacy in Europe


Brand Management Perspective

3318 April 2012

• 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


Conclusions

3418 April 2012

• 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 multi-channel retail brands


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.

mail order and internet pharmacy aesgp presentation james dudley

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