Challenges of E-Commerce Within the Pharmaceutical Industry
The pharmaceutical industry has shown itself to be customarily protectionist and conservative in regards to expanding into new business models, such as E-commerce. The progression of this sector within Europe has been slow, even though healthcare within E-commerce and the sale of prescription free medication utilising the online channel has been legalised since 1998.
Towards the end of 2003, the Dutch Online Pharmacy DocMorris, won its fight against the German Courts for the right to supply consumers with medication via a mail-order procedure at the European Court. The ruling allowed for the E-commerce supply of non-prescription medication across the European Union. Though this ruling came into effect over one and a half decades ago, only some of the European states have embraced the new channel, while others have had their concerns and therefore been hesitant. Due to this, each EU state now has differing regulations and laws concerning the online distribution of non-prescription medication.
The complexity of the pharmaceutical industry means it is heavily regulated, which is a contributing factor to the fact that the progress and the growth of pharmaceutical e-commerce can only be described as moderate, especially in comparison to non-regulated sectors such as fashion, beauty or travel. Furthermore, the fact that the pharmaceutical industry has not embraced the potential of the Internet and of E-commerce to alter the status quo of the market, it has therefore enjoyed far slower growth than that seen in a consumer product industry.
Regardless of this, the current growth in the use of e-commerce in the pharmaceutical industry cannot be disregarded. Even within the online pharmacy and prescription medication market, e-commerce has made huge leaps and has gained importance throughout the EU. It is predicted that by 2018, the online pharmacy market is expected to show huge growth and hit sales of over €5 billion. Simply put, the future of purchasing is online.
It can be seen that there is an increase in online marketing practices involving healthcare service providers and patients indicating that e-commerce in the pharmaceutical industry has come of age. The practice in its developmental stage is aided by gradual policy decontrol, despite the lower development speed. The captivating aspect of e-commerce in the pharma industry is that if achieved correctly, the patient can directly benefit as the consumer.
Pharmaceutical e-commerce has faced numerous challenges which have encouraged collaborations throughout the whole chain. Such factors have popularised the application of online sales platforms in the industry.
Challenge 1. E-commerce possibilities in the EU and legal restrictions
The pharmaceutical e-commerce has legal requirements distinct from other areas. James Dudley Management carried out a study of 17 EU countries, representing 67% of Europe’s internet users, which showed that 14 of those 17 countries authorise mail order purchases of non-prescription medication under their respective domestic law.
The report “Mail order and Internet Pharmacy in Europe” from 2012, revealed that only 7 of the European states allow for prescription medication to be sold by online pharmacies. These include Denmark, Germany, the Netherlands, Norway, Sweden, Switzerland and the United Kingdom. As expected Finland joined this list in 2013 when the process of e-prescriptions was introduced. In the 3 countries Italy, Austria and France e-prescriptions are illegal although permitted under EU law.
Therefore the growth of any online pharmacy business relies on the extent at which these businesses integrate themselves into the particular legal frameworks of the various EU states.
The regulatory challenges that have surfaced were facilitated by the online practice of pharmacy and have become apparent through the practice of online medicine. The challenges:
Challenge 2. Communication with the patient as the end-consumer
The usual practice of the pharmaceutical industry is to target healthcare professionals as the end-consumer. The oversight with this type of process is that the healthcare professional is merely the mediator between the patient and the pharma industry, therefore a change must occur and the patient needs to be considered as the end-consumer, this is according to Dr. Frank Antwerpes (CEO of DocCheck AG, Cologne). He states that the communication between the industry and medical professionals was not considered a dialogue, but was rather a “one-way-street”.
In pharmaceutical e-commerce, the dialogue with patients should be started by offering appropriate and comprehensible content. It is evident that pharmaceutical e-commerce companies struggle to develop and communicate helpful, useful, understandable, and educational content for the patient. The willingness to invest in high-quality content offers room for improvement to this challenge.
Challenge 3. Internationalisation
In comparison to an average consumer industry, the pharmaceutical sector is hugely internationalised. While the global character allows the pharmaceutical industry to produce and dispense their products in diverse international markets, there is also the risk of the differing legal and ethical requirements for the production of pharmaceuticals. Furthermore, the majority of online purchases are distributed from regional and national suppliers.
Challenge 4. Self-Medication and Inefficient storage facilities
While the availability of e-prescriptions is convenient, it encourages some issues that could have more grave personal consequences. This includes the issue of wrongful self-medication and inefficient storage of the medication.
The easy availability to prescription medication often leads to risky intake of pharmaceuticals without a sound diagnosis by a doctor or an indication of the proper dosage intake of the medication by the pharmacist. This may lead to cases of wrongful use of a medication and have serious consequences on the patient’s wellbeing.
Additionally, the efficient and correct storage of such pharmaceuticals cannot be correctly accounted for during transportation and storage for example. Especially the correct temperature is of the utmost importance in order to ensure the medication retains its correct potency.
In conclusion, though pharmaceutical e-commerce faces many complex challenges, the streamlining of prescription drug policies is a key factor in brightening the future of pharmaceutical e-commerce. The conservative rules of purchasing pharmaceutical products are slowly evolving as a result of the growing digital transformations and advancing consumer behaviours and expectations.
This will naturally result in a shift in pricing strategies within the pharmaceutical industry, with medication prices lowering and becoming more transparent. It is therefore important for the main market players to allocate its necessary resources and expertise to meet the customers’ expectation and needs.