James Dudley Management

James Dudley Management

Can e-commerce in Healthcare Succeed in Europe?

Can e-commerce in Healthcare Succeed in Europe?

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Mail order and Internet pharmacies have been a success in the USA and take around a quarter of the non-institutional healthcare market. In Europe while e-commerce in healthcare has been around since 1998, its progress as a pharmacy channel has been slow and patchy across the region. But is this about to change? A new report suggests it is.

A European Court ruling in late 2003 in favour of the Dutch Internet pharmacy DocMorris that was fighting courts in Germany for the right to supply consumers with medicines by mail order opened the doors for e-commerce in medical supply across the European Union1. While some States have embraced the new pharmacy channel, others have been reluctant to do so. Hence Internet and mail order pharmacies in Europe have evolved into different forms in response to the different regulatory environments in each EU State.

A 17 country online pharmacy study representing 67% of Europe’s Internet users published by James Dudley Management shows fourteen out of the seventeen countries in the study permit Internet and mail order transactions for non-prescription medicines under domestic law. The report Mail Oder and Internet Pharmacy in Europe - the 2012 edition shows that only Denmark, Germany, the Netherlands, Norway, Sweden, Switzerland and the United Kingdom allow prescription only medicines to be dispensed by online pharmacies. Although Finland is expected to be included on the list in 2013 when e-prescribing is introduced.

In three European States: Austria, France and Italy transactions are still technically illegal but are permitted under EU law for non-prescription medicines only.

Traditionally mail order and Internet pharmacies were seen as being synonymous with so called ‘pureplay’ mail order and online pharmacies such as Zur Rose covering Austria, Germany and Switzerland, DocMorris and Sanicare serving Germany and Pharmacy 2U In the United Kingdom.

‘Pureplay’ retailers are basically Internet enabled mail order discount pharmacies that deliver directly to their customers by post or courier. They offer shoppers convenience, confidentiality and above all discounts. Hence, they are popular in the USA among patients on repeat prescriptions. There they represent nearly a quarter of non-institutional healthcare turnover but only 7% of prescriptions. The development of the prescription based model in the USA is in contrast to the European model which is still very much led by demand for non-prescription medicines and personal care.

However, ‘pureplay’ retail enterprises now have to compete with retail pharmacy chains which can integrate online services into their traditional pharmacy offer to provide shoppers with a multi-channel experience. This according to the Dudley report is where the future lies and cites examples including innovative developments in Walgreen’s and Sam’s Cabin in the USA. According to Walgreens multi-channel shoppers are estimated to be three times more valuable than a single-channel shopper hence the drive to go after them.

Pharmacy chains in Europe have so far been slow to follow suit. For example the report says that all the pharmacy chains in Sweden claim that e-commerce has a role to play in modern pharmacy retailing according to Apotek Hjärtat. But, only one, Apoteket provides a substantial online service. Apoteket claims double digit growth from its online offer last year.

There are however exceptions. In the United Kingdom some of the largest pharmacy chains combine online and in-store promotions. Some go further and provide online doctor services. Boots the Chemists, Lloydspharmacy and the Co-operative Pharmacy for example employ doctor services for patients and provide prescriptions where necessary for emergency and oral contraception, erectile dysfunction, hair loss, and cystitis among a variety of embarrassing patient needs.

In Poland Pelion’s Apteki dbam zdrowie (I care for my Health) chain integrates the online pharmacy Doz.pl. into its retail offer through over 2,000 pharmacies bearing its brand.

Germany is the leading market in Europe for ‘pureplay’ mail order and Internet pharmacies with sales of €1.2 billion. This represents some 3.5% of the total pharmacy sales and around 12% of non-prescription healthcare business. This is probably an accident of history in that the market evolved from cross border distance marketing pioneered by the Dutch company DocMorris. Furthermore, unlike the United Kingdom the absence of wholly owned pharmacy chains in Germany has not provided the brand support for integrating online and traditional pharmacy.

Despite the success of DocMorris in Germany its owner Celesio recently decided to sell off its mail order business. This raised the question of whether the ‘pureplay’ model is sustainable. The company says it is. Celesio, one of Europe’s leading pharmaceutical distributors, acquired DocMorris in May 2007. This led to considerable bad feeling among German pharmacists leading to a loss of market share for the company and was the reason given by Celesio for the disposal.

The future of mail order and Internet pharmacy is likely to see the ‘pureplay’ model gradually merging into the retail offer of pharmacy chains. This will occur more rapidly where wholly owned and franchise concept chains exist and this is simply because brand owners are in a position to exploit the advantages of creating a multi-channel shopping experience.

In those markets where wholly owned chains do not exist there is the opportunity for ‘virtual chains and voluntary groups to introduce online elements into their retail offerings. The example of the relatively benign online network involving all the voluntary groups in Denmark, Apoteket.dk is a case in point. The ‘Pureplay’ model will remain dominant in Germany. This said, the major players have aligned to the main druggist chains in Germany.

Mail order and Internet Pharmacy in Europe the 2012 edition New Emerging Multi-channel Structures is published by James Dudley Management in June 2012 – details information@james-dudley.co.uk web site www.james-dudley.co.uk

Press contact James W Dudley ++44(0)1562 747705

Additional Information for Editors

In three European States: Austria, France and Italy transactions are still technically illegal but are permitted under EU law for non-prescription medicines only.

Figure 1: Mail Order and Internet Pharmacy Regulatory Status 17 Country Study 2012

Country % Internet Users Europe Permitted Mail Order and Internet Pharmacy OTC Medicines Permitted Mail Order and Internet Pharmacy Prescription Only Permitted Mail Order and Internet Pharmacy OTC under EU Law only
Austria 1.30% No No Yes
Belgium 1.70% Yes No  
Czech Republic 1.40% Yes No  
Denmark 1.00% Yes Yes  
Finland 0.90% Yes Expected 2013  
France 9.50% No No Yes
Germany 13.70% Yes Yes  
Hungary 1.30% Yes No  
Italy 6.30% No No Yes
Netherlands 3.10% Yes Yes  
Norway 0.90% Yes Yes  
Poland 4.70% Yes No  
Slovakia 0.90% Yes No  
Spain 6.10% Yes No  
Sweden 1.80% Yes Yes  
Switzerland* 1.30% Yes Yes  
United Kingdom 10.80% Yes Yes  
Total 17 Countries under Study 66.7% 14 6 3

*Restricted to companies providing medical supervision

Source: James Dudley Management - Mail Order and Internet Pharmacy in Europe 2012 edition

Austria is unique in that it permits mail order for non-prescription medicines from other EU States in compliance with EU regulations on a very restricted basis but not from domestic pharmacies. This has led to a situation where the Swiss company Zur Rose is the leading online consumer healthcare provider in Austria through its EU based subsidiary in the Czech Republic. Zur Rose also provides the druggist chain dm with a pharmacy ‘pick-up’ service.

Figure 2: Retail Share of US Pharmaceutical Market by Channel 2011

Source: James Dudley Management - Mail Order and Internet Pharmacy in Europe 2012 edition

Compared to the patchy impact in Europe nearly a quarter of retail pharmacy turnover is delivered by mail order and Internet pharmacy. The growth of mail order in the USA has been largely driven by Pharmacy Benefits Manager (PBMs) networks. These organizations provide patient services for health insurance providers for which there is no equivalent in Europe. The largest PBMs either own or integrate selected mail order and Internet pharmacies into their customer service networks.

Figure 3: Brand Owner % Share of the Market Mail Order Pharmacy - Germany

Source: James Dudley Management - Mail Order and Internet Pharmacy in Europe 2012 edition

Press contact James W Dudley ++44(0)1562 747705

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