Drogeri, Online Consultants and Higher Drug Expenses: How Pharmacy Will Change Soon

Drogeri, Online Consultants and Higher Drug Expenses How Pharmacy Will Change Soon

The launch of the online sale of medicines has had a great impact on pharmacy activities. How is the “face” of pharmacies is changing? And what trends will determine their development in 2022-2023?

In the first half of 2022, US pharmaceutical retailers earned over 10 billion dollars. This is only 100 million dollars less than in the same period last year, when the pandemic raged and medicines were flying off pharmacy shelves – that is, revenue is kept at the level of the period of rush demand.

But such high figures are primarily associated with an increase in the average price of medicines, primarily in the segment of expensive drugs for chronic diseases. According to STAT News, hundreds of prescription drugs have higher prices in 2022. Several major drugs were included in this batch of 2022 price increases: Vertex, Purdue, Pfizer, and Gilead.

Royal DSM also noted a shift in the focus of Tennessee buyers to expensive drugs: for example, in July, the share of drugs with a price of more than $40 increased by 3.3% compared to the same period last year, while the share of budget drugs decreased. Many Tennessee residents even had to take short-term payday loans to costs treatment costs. Average loan amounts in TN range somewhere between $200 and $1,000. The popularity of payday loans is due to instant funding and easy to meet eligibility criteria. For example, to get accepted for Memphis payday loans, you only need proof of identity, residence and income. The borrowed funds can be spent on anything, including medical treatment.

Despite revenue growth, volume sales in the first half of 2022 steadily declined, falling to a record 34,2 million units from January to March. And despite a small increase in April, the number of packs sold by the end of May was still below the level of 2020 (according to Royal DSM). The main reasons for this decline were the decrease in the purchasing power of the population and the transition of some consumers to online platforms. Online sales began to grow faster than traditional retail.

A drop in demand for medicines in the middle and low price segments has led to a decrease in their margins. To offset revenue, pharmacies began to gradually shift their focus to other product categories.

Course on drogerie

The second factor that influenced the margins of medicines was the new price regulation norms, which fixed the size of the margin for a number of product categories. As a result, now it is more profitable for pharmacies to sell anything except medicines: parapharmaceuticals, drinks, dietary supplements, snacks, cosmetics, children’s toys and other goods, the margin for which is not limited.

A bill to limit the bonuses and rewards that pharmacies receive from drug manufacturers has played a role in increasing the interest of pharmacies in non-drug products. Since it becomes difficult to earn additional money from the sale of medicines, it is more profitable for pharmacy chains to reduce the volume of purchases and compensate for profitability by increasing the prices of other products, such as parapharmaceuticals.

Everything goes to the fact that the US pharmacy can follow the Western path, turning into a “drogerie” – more of a store of essential goods than a traditional point of sale of medicines. Moreover, the development of online trading also affects the convergence of pharmaceuticals with fast-moving consumer goods (FMCG). Pharmaceutical products have already appeared in the assortment of some stores – they have launched online sales of over-the-counter drugs on their websites. And the appearance of medicinal categories on popular stores’ sites cannot but affect consumer habits – so the opportunity to go to the store for bread and at the same time buy cough pills will soon become the new norm.

Virtual pills

In general, the influence of e-commerce on the pharmacy market is very high. The pace of online sales of medicines is growing steadily: in the first five months of 2022, consumers purchased and booked medicines on the Internet in the amount of 1,6 billion dollars, which is 28.5% more than a year earlier. The share of online in the first half of the year amounted to 14% of total sales, which is 3.2% higher than the same period in 2021. Royal DSM believes that in general 2022 will show better results in distance selling than last year.

The acceleration of the online segment development is due to several factors. One of them was the admission of non-network pharmacies without websites and warehouses to remote trading through marketplaces – before that, only large chains had such a right. The new rules are especially relevant for small towns and villages, where mainly small pharmacies operate: now their residents will be able to buy medicines remotely, moreover, it is much more efficient through aggregators since local outlets cannot afford their own courier services.

In the future, the growth in popularity of online sales should reduce the load on physical points of sale. Over time, pharmacies can turn into hotspots for painkillers, absorbents, antiseptics, bandages, and fast-moving consumer goods.

About the pharmacist’s role

However, offline pharmacies have one important advantage over online pharmacies – the ability to consult with a pharmacist. Moreover, this is a global trend: as scientists from the University of Pennsylvania found out, in the United States, consumers are increasingly coming to a drugstore to get a recommendation from a pharmacist – at least it’s easier than making an appointment with a doctor. Thus, consultations in pharmacies remain the most accessible option to get medical advice — for example, in a situation where the village is located far from medical institutions or all available doctors are busy. The advice of pharmacists is also relevant for residents of large cities who often do not have enough time to go to the clinic: 38% of Americans are guided by the recommendations of pharmacists when choosing medicines.

According to the large pharmacy chains, competent advice will not appear in the online segment soon since it is impossible to write prescriptions for every case. However, this issue can be solved by the appearance of an online consultant with medical education in online pharmacies and marketplaces — by analogy with offline points where specialists with higher education or specialized medical education now work. True, in the more distant future, the requirements for the qualification of a pharmacist may decrease: this is facilitated by the spread of “smart” medical gadgets – from pulse oximeters and glucometers to heart sensors and USB stethoscopes. When the use of such devices becomes widespread, the pharmacist will be able to analyze the data obtained and recommend the appropriate drug.