E-pharmacy: Can the brick-and-mortar pharmaceutical retail be the winner?

The pharmaceutical industry continues to dominate the healthcare market in 2019. The mergers and acquisitions, as well as a greater adoption on tele-pharmacy and e-pharmacy, continue to evolve followed by 2018. E-pharmacy, or online Pharmacy, is an online service that sends out prescriptions order to their customers through mail companies. Amazon's $753 million acquisition of PillPack in 2018 placed the concept of e-pharmacy on the public's spotlight. However, should the industry worry about the move? More importantly, why the extension of e-pharmacy is a winning game for the traditional brick-and-mortar pharmaceutical retails?

The media reacts way too positively to the acquisition. Some even claimed that PillPack is expected to beat up the traditional players in the pharmaceutical retail market. Yes, buying medicine online could be a matter of time, but should the industry be worried about the fact that the biggest e-commerce beast is supporting the oldest and largest e-pharmacy player in the United States? Unfortunately, PillPack is still too small to represent the entire US$270 billion pharmaceutical market, even represent both the regulated and unregulated e-pharmacy space. More importantly, PillPack isn't even in the competition: It is providing niche services by repackaging of multiple drugs into sachets with specific doses. However, what really draws the market's attention is the growing expectation in the e-pharmacy market. Insiders believe this move enables Amazon to learn about the realities of the healthcare sectors, as well as gives it access to the pharmaceutical wholesaler's licenses in 49 States. At this point, it is still too naive to say Amazon will take over the place and beat up the traditional healthcare players. 

E-pharmacy is certainly highly profitable growing sectors that are worth this much of the attention. The global e-pharmacy market was approximately $32.32 billion in 2018 and expected to reach USD$107.53 billion by 2025, based on a report published by Zion Market Research in June. In the United States, 18.5% of the pharmaceutical retail market is the mail-ordered pharmacies, and this number is expected to climb in the upcoming years. E-pharmacy is undoubtedly an unavoidable pathway to develop in the pharmaceutical industry. 

There are also plenty of reasons to explain why e-pharmacy must draw all the stakeholders' attention and money in the healthcare sector. The e-pharmacy market is capturing substantial customer-base overtime. It reduces the dependence of chronic illness patients on walk-in stores by delivery medicine to their doorsteps; it also means a possibility to deliver medicine to those most in need in rural areas. The growing application of e-prescriptions and the long-term population health challenges have contributed to the growth. The United States has a tech-savvy population, with four out of five people usually search over the Internet before the doctor appointment. Besides, high drug prices is also a contributor to the usage of e-pharmacy. The major e-pharmacy is providing medicines at discounted rates, as well as providing products that are unavailable in the traditional pharmaceutical retails. Not to mention, there are also a significant number of unlicensed rogue e-pharmacy offering low prices and quick delivery of medicines across the countries.

However, the raise of e-pharmacy is just indicating the need for adopting a new business model but not changes of game players. The United States has the most complex and strict regulatory policy which restrict this battlefield to only a few mature players. CVS Pharmacy, Express Scripts and Optum are the three top distributors that dominated more than 90% of the entire market share, referred to a report by EY. Given the fact that offline pharmacies are dominating more than 80% of the distribution channel, it is easy to draw on the vague assumption that the brick-and-mortar pharmaceutical retails are threatened by the rise of e-pharmacy. In contrast, they are also the leading e-pharmacy market players in the United States and globally. According to a newly published report by Zine, CVS Health, Express Scripts and Doc Morris dominated the global e-Pharmacy market in 2018; Walgreen, Optum, Walmarts and a few more players are closely following behind in market distribution. These players, with a deep-rooted product presence, along with reliable distribution channels, are expected to gain significant e-pharmacy market share during the forecast period until 2025. 

E-pharmacy means more than just an online medication delivery services, which can explain why the brick-and-mortar companies are engaging way deeper and earlier in the e-pharmacy market than the public realised. The pharmaceutical companies may secure greater insights on drug sales through E-pharmacy. It is not too difficult to tell the stakeholders are facing pressure from rising healthcare cost and the desired of the payers. E-pharmacy is one of the main unavoidable growing sectors that can enhance their control of the dollars. 2018 is a big year for the industry. Cigar's $52 billion acquisition of Express Scripts is approved by the U.S. Department of Justice in September; and one month later, the market announced the US$69 billion mergers of CVS and Aetna, which remained as the largest insurance deal in history. Not to mention their competitors UnitedHealthcare, a larger insurance company is owning OptumRx(mail-delivery business). These mega-mergers and consolidations mean the healthcare players are getting more control to the prescription and medical care than the individual patient does. It is impossible for them to miss out the E-pharmacy market, given their dominated positions in drugs, insurances, specialists and retails. Similar to the offline space, the e-pharmacy area is expected to consolidate --- the bigger players will chase out the less capitalised competitors. Most of these pharmaceutical retails mentioned above have built up relationships with customers for years. If a centralised online supply is implied, it can directly impact on individual pharmacists and local pharmacies. Most of the small pharmacies do not have the spare cash to deal with it. It is also unwise for the individual pharmacies to involve in the e-pharmacy game since the majority of their customers might not want the medicine to dispatched online. 

E-pharmacy is a must-do for countries like the United States, New Zealand and other developed countries in the world. A main slogan of e-pharmacy is last mile delivery. Using the United States as an example, doctors are increasingly difficult to find in rural America. The federal government now designates nearly 80% of rural America as "Medically underserved", which is the home of to 20% Americans. Even worse, health officials predict the number of rural doctors will decline by 23% over the next decade, not to mention the half of them are over 50 and a quarter of them are beyond 60. It is where community pharmacy and pharmacists are coming in place. Pharmacy is not only urgently needed to extended online, but also offline. To make the rural areas profitable enough to attract the pharmacy groups, a combination of e-pharmacy and walk-in store can be the solution. Pharmacists are expected to work collaboratively with nurses and other professionals in both the community and clinical settings, and Pharmacy can be a starting point for these medical deserts. E-pharmacy should not be seen as a revolutionary signal, but an actual applicable tool to reduce inequalities and achieve value-based care in both rural and urban. 

E-pharmacy is just a part of the entire pharm-tech picture, but it will become truly valuable once the dots get connected in a timely manner. There are four technology trends in the pharmacy industry have been highlighted this year, including Digital Therapeutics, Mail-order Pharmacies, Artificial Intelligent and Telepharmacy. It will be challenging and worth to imagine a picture with all of them involved in the currently traditional retails. Consider a community pharmacy is also having an Internet access point for Telepharmacy and E-pharmacy services. The patient records will be the main entry point of their prescriptions from the hospital and other health settings. The pharmacy automation is able to free up the pharmacists' hand from dispatching medicine and move them to the front-line personal services. This intelligent Pharmacy can verify and send out a prescription through mail company, as well as counselling their patients through live-video. E-pharmacies are likely to create a win-win situation for the stakeholders in the value chain, including the traditional walk-in pharmacy and individual community pharmacists.

E-pharmacy should not be viewed as a competitor of the traditional walk-in retails, rather than that, it should be one of the many technological bricks that can build into conventional care settings. E-pharmacy is having tremendous growth potentials, not because it can replace what we have, but enabling flexibility to the multi-layered pharmaceutical chain. It is an extension of the care we deliver. Technology itself might not be able to reduce inequalities, but the way we use can.