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Mail order and Internet Pharmacy presentation to the Annual Conference of the AESGP 2010 - based on James Dudley's ongoing study Mail Order and Internet Pharmacy in Europe

Mail order and Internet Pharmacy presentation to the Annual Conference of the AESGP 2010 - based on James Dudley's ongoing study Mail Order and Internet Pharmacy in Europe

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Mail order and internet pharmacy aesgp presentation james dudley Presentation Transcript

  • 1. The Internet Pharmacy 46th AESGP Annual Meeting Dubrovnik 2010 by James W. Dudley Tel. ++ 44 1562 747705 Fax ++ 44 1562 750275 e-mail information@James-Dudley.co.UK web site: www.james-dudley.co.ukSource: OTC Distribution in Europe 2010 edition
  • 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 ConclusionsSource: OTC Distribution inEurope 2010 edition 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 2
  • 3. Factors influencing change in medication delivery Future Channel Strategies Regulation – changing the law Changing patient/ consumer needs, demographics, choices, experiences Innovation and and expectations (cost, convenience, New entrants – New Channels Technology Transfer privacy and advice) Healthcare provider commitments economics and capabilities Healthcare Supply chain provider existing commitments economics and competitors and Supply chain existing competitors economics capabilities and economics Patient/ Antimonopoly consumer needs, Agents Pharmacy Lobby choices, James Dudley OTC (European experiences andDistribution in Europe Commission) expectations18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 3
  • 4. Factors influencing change in medication delivery Future Channel Strategies Regulation – changing the law Changing patient/ consumer needs, demographics, choices, experiences Innovation and and expectations (cost, convenience, New entrants – New Channels Technology Transfer privacy and advice) Healthcare provider commitments economics and capabilities Healthcare Supply chain provider existing commitments economics and competitors and Supply chain existing competitors economics capabilities and economics Patient/ Antimonopoly consumer needs, Agents Pharmacy Lobby choices, James Dudley OTC (European experiences andDistribution in Europe Commission) expectations18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 4
  • 5. Factors influencing change in medication delivery Future Channel Strategies Innovation and Technology New entrants Regulation – changing the law Changes to regulation Changing patient/ consumer needs, Conflicting influences of pharmacy lobby demographics, choices, experiences and European Commission Innovation and and expectations (cost, convenience, New entrants – New Channels Technology Transfer privacy and advice) Healthcare provider commitments economics and capabilities Healthcare Supply chain provider existing commitments economics and competitors and Supply chain existing competitors economics capabilities and economics Patient/ Antimonopoly consumer needs, Agents Pharmacy Lobby choices, James Dudley OTC (European experiences andDistribution in Europe Commission) expectations18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 5
  • 6. Factors influencing change in medication delivery Future Channel Strategies Innovation and Technology New entrants Regulation – changing the law Changes to regulation Changing patient/ consumer needs, Conflicting influences of pharmacy lobby demographics, choices, experiences and European Commission Innovation and and expectations (cost, convenience, New entrants – New Channels Technology Transfer privacy and advice) Healthcare provider commitments economics and capabilities Healthcare Supply chain provider existing commitments economics and competitors and Supply chain existing competitors economics capabilities and economics Patient/ Antimonopoly consumer needs, Agents Pharmacy Lobby choices, James Dudley OTC (European experiences andDistribution in Europe Commission) expectations18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 6
  • 7. Factors influencing change in medication delivery Channel strategies at different levels in the supply chain and moving at different paces across Europe Future Channel Strategies Innovation and Technology New entrants Regulation – changing the law Changes to regulation Changing patient/ consumer needs, Conflicting influences of pharmacy lobby demographics, choices, experiences and European Commission Innovation and and expectations (cost, convenience, New entrants – New Channels Technology Transfer privacy and advice) Healthcare provider commitments economics and capabilities Healthcare Supply chain provider existing commitments economics and competitors and Supply chain existing competitors economics capabilities and economics Patient/ Antimonopoly consumer needs, Agents Pharmacy Lobby choices, James Dudley OTC (European experiences andDistribution in Europe Commission) expectations18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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 ConclusionsSource: OTC Distribution inEurope 2010 edition 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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 inefficiencies18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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 performanceJames 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 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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 Technologies18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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 ConclusionsSource: OTC Distribution inEurope 2010 edition 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 12
  • 13. Internet and Mail Order Pharmacies – bind the concept of discount homeshopping 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) 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 14
  • 15. 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 reliefWebsavy 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 GermanyMain pharmaceutical distributors strategies to market directly to consumers/patients:- Celesio, Alliance Boots, Polska Grupa Farmaceutyczna (PGF) etc International Ltd 2010 18 April 2012 www.James-dudley.co.uk © James Dudley 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 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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 edition18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 17
  • 18. Participation by the Major Pharmaceutical Distributors• 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 havecomprehensive 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 prescriptionbusinesses in Switzerland 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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-PointsJames Dudley OTC Distribution in Europe 2010 edition 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 19
  • 20. Examples of Different Internet Mail Order Pharmacies Portal driven pharmacy co- ‘Pure play’ online operatives and franchise Pharmacy chains home Non-pharmacy Pickup pharmacies chains delivery services points Internet Web Site Internet Web Site Internet Web Site Internet Web Site Catalogue Catalogue Catalogue Catalogue Telephone/Fax Telephone Order in store or Call Order in store or Call Call Centres Centres CentresHome delivery by mail or Collect at affiliate pharmacy Home delivery by mail or Collect at Pickup point courier courier 18 April 2012 20 Home delivery by mail or Home delivery by pharmacy James Dudley OTC courier Distribution in Europe www.James-dudley.co.uk © James Dudley International Ltd 2010
  • 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 OTCDistribution in Europe 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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 SwedenDocMorris International Pharmacy Channel Brand Germany Ireland Sweden GfK 2009 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 22
  • 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 ConclusionsSource: OTC Distribution inEurope 2010 edition 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 23
  • 24. Germany – Internet and Mail Order Pharmacy Internet Mail Order Pharmacies represent a little over 3% of the German retail healthcare market James Dudley OTC Distribution in Europe Non-prescription OTCs represent 41% of Internet Mail Order Pharmacies’ sales and prescription medicines 32% (IMS).IMS Health/BVDA 2009 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 24
  • 25. Non - Prescription Internet and Mail Order in Germany Internet and Mail Order pharmacies represent around 8% of the German Non-prescription James Dudley OTCDistribution in Europe Market Sector grew +30% in 2009 according to IMS Health Biggest categories are pain relief, cough cold, digestive remedies and pain reliefIMS Health 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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 reliefIMS Health 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 26
  • 27. Germany - OTC Healthcare Buyers - Age Profile by Channel2010 Axel Springer AG, Bauer Media Group Internet and mail order shopper profiles are different to those of pharmacy, druggist and discounter shoppers 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 27
  • 28. Germany OTC Healthcare Buyers – Mail Order v Internet 2010 Axel Springer AG, Bauer Media GroupAnalysis of consumer access by Internet or Mail Order shows different age profilesInternet user profile 20 years to 59 years = 86% of all Internet shoppersAt 60 years plus user profile is lower than sampleMail order user profile 30 to 69 years = 80% of all mail order shoppers 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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 Leading players have formed their own trade associationServiceBarometer AG – Forschungsauftrag Federal Association of German Mail-order Pharmacy (BVDVA) 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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 ConclusionsSource: OTC Distribution inEurope 2010 edition 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 30
  • 31. Internet and Mail Order Pharmacy – Threat or PromiseInternet /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) 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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 ConclusionsSource: James Dudley: MailOrder and InternetPharmacy in Europe 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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 basis18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 33
  • 34. Conclusions• Internet and mail order pharmacies have exposed the differences in legal restrictions, prices andproduct availability between EU member states and also countries outside the EU• Clarification of the legal position of Internet pharmacies resulting from the DocMorris case hasalready produced the catalyst for expansion for online trading in pharmaceutical products especiallyin 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 toothers 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 18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 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.18 April 2012 www.James-dudley.co.uk © James Dudley International Ltd 2010 35