Professional Documents
Culture Documents
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Agenda
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James Dudley International Ltd 2015
This presentation is based on 2 Major European Consumer
Healthcare Market Reports from James Dudley Management
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James Dudley International Ltd 2014
OTC Distribution in Europe 2014 edition
A Study of Consumer Healthcare Channels in 22
European Countries
671million inhabitants
224,000 pharmacies
247 billion Retail Pharmacy Market
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Agenda
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James Dudley International Ltd 2015
European Retail Pharmacy Market (22 Market Study)
+ 250 billion European retail pharmacy
market
Average pharmacy turnover in Europe is
1.158 million p.a.
Nearly 70% of pharmacy turnover is price
regulated i.e. reimbursed pharmacy, fees and
services
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James Dudley International Ltd 2015
The Changing Business Environment for European Pharmacy Channels
DOWNWARD PRESSURES ON PRICES AND FEES IN A Overall deflationary factors subduing prices combined with payer cost
DEFLATIONARY ENVIRONMENT management and procurement strategies, service contracts and
technology & information flows - lower earnings for more work from
pharmacies
GLOBALIZATION OF CHANNEL INVESTMENT, PROCUREMENT Corporate geographic expansion, global/regional brands and M&A
AND COMMODITISATION OF GENERICS strategies to achieve scale economies and management synergies
resulting in competitive global supply & procurement networks and
international financial flows
CONSUMER APPETITE FOR MULTI-CHANNEL RETAIL ACCESS Competitive advantage through multi-channel applications, e-commerce digital
AND DEMANDS FOR HEALTH RELATED FRONT END applications and end to end customer shopping experience
MERCHANDISE
Latent demand for health related front end merchandise e.g. skincare and cosmeti
PURE PLAY INTERNET PHARMACY & MASS MARKET Pure play Internet pharmacies taking share of homecare, self-care and
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COMPETITION front-end pharmacy
19 February 2016categories. Mass market retailers' ambitions to
capture a share of the pharmacy market through products licensed for
sale in non-pharmacy outlets and the acquisition of pharmacy licenses
Agenda
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James Dudley International Ltd 2015
Changing Demographics and Pharmacy Shopper
Expectations
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James Dudley International Ltd 2015
Aging European Population
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James Dudley International Ltd 2015
Mass Market Chains new Stakeholders in Consumer Healthcare
Mass market operators taking share of non-prescription market in the United
Kingdom, Switzerland and Sweden as well as the Central and Eastern European States
All major supermarket chains in the United Kingdom operate pharmacy chains
Tesco, Sainsbury, Morrison, Asda Wal-Mart and Waitrose
Galenica has opened 44 pharmacies in a joint venture with the Coop under the name
Coop Vitality in Switzerland
The supermarket chain ICA has opened up shop-in-shop pharmacies under the
banner ICA Cura. The company has also bought Apotek Hjrtat, Swedens largest
private pharmacy
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James Dudley International Ltd 2015
Mass Market Chains Collaboration with Pure play Internet Pharmacies to
Provide Healthcare Solutions in Germany and Austria
German and Austrian mass market chains taking a pharmacy position in partnership
with major mail order and Internet pharmacy operators
Source: Mail Order and Internet Pharmacy in Europe - the 2015 edition
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Agenda
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James Dudley International Ltd 2015
Challenges of Mail Order and Internet Pharmacies in Europe
Influence of
national regulation
determines scope
of offer i.e. Multi-channel
permitting response by
prescription only pharmacy chains
medicines or not and groups to
Source: Mail Order and Internet Pharmacy in Europe - the 2015 edition Pure play
Competition tends to be Pure Play Internet driven mail order in the absence of Internet
competition from retail pharmacy chains (e.g. Germany) competition
Where retail chains or pharmacy groups dominate they develop multi-channel i.e. bricks
and mortar and online options to compete with pure play competitors
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Pure Play Mail Order and Internet Pharmacies in Europe
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James Dudley International Ltd 2015
Pharmacy Shopper Appetite for Multi-Channel Retail Access in Europe
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James Dudley International Ltd 2015
Pure-play Mail Order and Internet Pharmacies compared to Multi-channel
Pharmacies in Europe
Competition tends to be Pure Play Internet driven mail order in the absence of retail pharmacy
chains (e.g. Germany)
Where retail chains or pharmacy groups dominate they develop multi-channel i.e. bricks and
mortar and online options as a strategic response to pure play competitors
Pharmacy chains can compete with pure play Internet pharmacies on price and online
convenience but can outclass digital rivals with personal service and delivery/collection options
The slow down in development of pure play Internet pharmacies in USA, Australia and United
Kingdom is due, at least in part, to the development of multi-channel strategies among major
pharmacy and drugstore chains
Walgreens Boots Alliance Multi-channel Case Study
E Commerce - Channel
Order online
pickup in-store
Online
promotions
E Pharmacy
E Clinics
Mobile apps
In-store Channel
Loyalty schemes
and rewards
Source: Mail Order and Internet Pharmacy in Europe On-shelf
the 2015 edition promotions
In-store based
Boots, Britains number one pharmacy clinics including
chain is the largest online pharmacy in smoking
the United Kingdom cessation, flu jabs
etc
Internet pharmacy shoppers 4 times Front end
more likely to purchase online from pharmacy
development
Boots than pure play leader
(cosmetics
Chemistdirect advisors)
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James Dudley International Ltd 2015
Major Pharmaceutical Distributors Driving Change in Europe
28 19 February 2016
Pharmacy membership of Groupings in Europe
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19 February 2016
Number of Pharmacies in Wholly Owned Groups in Europe
Loose unbranded Group of independent pharmacies aligned to a wholesaler usually low cost
wholesaler group membership, range of services members can choose from the main
purpose is to promote loyalty to the sponsoring wholesaler
Franchise Concept Independent pharmacies invest in a retail brand umbrella whose marketing,
procurement operations and formats are controlled by the brand owner
The failure on the part of their managements to understand the importance of differentiating their retail
offer, positioning and branding
Wholesalers have concentrated on retaining pharmacy loyalty through the leadership of groups
Members cherry pick intermediary offers rather than building a retail brand
Lack of full hearted support for organized brand promotions by group members is frustrating for
manufacturers and undermines the groups buying strength
Consumers trust in retail brands reflect their experiences, expectations and quality and cost
perceptions, so chains which fail to provide a consistent consumer offer undermine this trust
.....Members are realising that as well as good buying, innovation such as loyalty cards, branding,
formatting and promotions are important elements for competing in a competitive retail sector.....
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James Dudley International Ltd 2015
Major Multi-country Retail Pharmacy Chains in Europe
Mergers between large US pharmacy channel players and European majors offer global economies and
procurement strengths endow such players with considerable competitive advantages that would force a
structural response from the rest of the market
New Europe-wide healthcare retailers strategies which combine wholly owned pharmacies, franchise
concepts and cooperation partner independents into competitive retail pharmacy brands rather than
retail estates are changing the landscape for marketing healthcare.
Investment into end-to-end customer service models meeting the complex needs of patients and
healthcare consumers in a rapidly developing digital age
Development of front end and consumer healthcare business through in store branding, private label
and multi-channel marketing
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James Dudley International Ltd 2014
New - European Multi-format Pharmacy Brands
Brand
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James Dudley International Ltd 2015
Walgreens Boots Alliance AmericansourceBergen
Global Footprint
12,800 wholly owned stores in 11 countries
340 Distribution centres serving 180,000 customers in 19 Walgreens Boots Alliance
countries
+ 9,000 affiliate partner pharmacies
Aggregation of Purchasing Power
Estimated global sales
Global pharmaceutical pipeline as a result of ABC tie up 2014 - $115 billion
Buying leverage for generics lowest cost advantage
Cross organizational and global buying power Sales target
Leading Innovation in Pharmacy Retailing 2016 - $130 billion
Leadership in multi-channel retailing in USA and UK
Global synergies in customer loyalty programmes
Development of front-end pharmacy and consumer
healthcare value
McKesson Corporation acquisition of Celesio
Global Footprint
+12,000 wholly owned and banner stores in 10 countries
120,000 customers in 20 countries
Aggregation of Purchasing Power McKesson
Global sourcing expertise and scale to create value in the
pharmaceutical supply chain
Buying leverage for generics Estimated global
Cross organizational and global buying power
Leading Expertise in Pharmacy Distribution sales 2014
Leadership in managing affiliate partners (banner $170 billion
management) in North America and Europe
Top wholesaler positions in USA and Europe (10 major
markets)
Top 3 drugstore positions in USA and Europe
Agenda
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James Dudley International Ltd 2015
mmary Conclusions - European Pharmacy Channels - Change Drivers Affecting Competiti
Success
Consumers
Changing demographics - retiring baby boomers - surge in older, richer and healthier
Pharmacy Channels over 65s
Globalization of Retail and Wholesaler
Emergence of want it now shopper expectations
channels
Further consolidation of wholesale channels Rapid growth in tech savvy multi-channel pharmacy shoppers (with female bias)
buying front end health related products and motivated by discounts and convenience
Retail consolidation into groupings
Massive uptake of social media and smart phone apps
Growing power over suppliers as buyers and
distributors
IT and Digital capabilities become core Politics/Regulation
competitive advantages New Entrants Re-regulation of pharmacy establishment and deregulation
Multi-channel and Omni-channel shopping Non-pharmacy competition of non-prescription products
strategies from mass market retailers Europe-wide Rx to OTC regulatory framework
Growing trend towards promoting profitable in developing rival pharmacy Recognition of Internet pharmacy and responsive
front end and OTC medicines chains and multi-channel regulation
alliances with online Downward pressures on price regulated services and
pharmacies pharmacy contracts (lower margins/higher costs)
Pure play mail order and
Suppliers Internet pharmacy
Diminishing power over channel buyers GSL and Free Sale OTC Technology
New channel focused trade marketing Medicines in mass market, Digitital revolution planning, logistics and marketing
structures convenience and gas stations Rapid growth of Internet access among key consumer
Movement to direct supply of in patent segments
products and branded services www.james-dudley.co.uk Adoption of digital applications as a competitive advantage
Commoditization of generics , private James Dudley International Technololy to create a seamless shopping experience
label and concentrated buyer power of Ltd 2015
omni-channel
major groups forcing supplier consolidation
Gloablization of consumer health brands
by main players with consequent spin off of
local and regional brands to niche players.
NEW 2016 edition of OTC Distribution in Europe is
now available from www.james-dudley.co.uk
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Jame6 Dudley International Ltd 2016
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Retail pharmacies and their suppliers will need to find new strategies for
competitive success in a healthcare supply chain increasingly driven by the
needs of empowered consumers and impacted on by the challenges of new
global players with aggregated buying power, multi-channel retail strategies and
spreading multi-format European retail pharmacy brands
James Dudley author of OTC Distribution in Europe and Mail Order and Internet Pharmacy