Five predictions for e-commerce in the pharmaceutical industry in 2015

Medical e-commerce logistics license liberalization threshold lowered

Yibang Power Network learned that as a special product, medicines have relatively high requirements for logistics conditions. The entire logistics field including warehousing, transportation, distribution, etc. must be carried out in accordance with the national "Pharmaceutical Good Distribution Practice" (GSP) standards. However, it is worth noting that most domestic logistics companies currently do not have the qualifications to distribute medicines.

Because of this, for pharmaceutical e-commerce companies, logistics and distribution are currently a stumbling block that limits the scale of development, making it difficult for pharmaceutical e-commerce companies to launch services such as "1-hour delivery" and "urgent drug delivery". However, this problem is being solved by the market. Recently, the pharmaceutical e-commerce platform Qilekang obtained the first domestic pharmaceutical B2C logistics license and announced the establishment of Guangzhou Qilekang Modern Pharmaceutical Logistics Co., Ltd., officially starting to build its own modern pharmaceutical logistics system.

In this regard, Longyan believes that by 2015, the country will lower the threshold for issuing pharmaceutical logistics licenses, and a number of qualified pharmaceutical and logistics companies will obtain pharmaceutical distribution qualifications. "The "Internet Food and Drug Operation Supervision and Management Measures (Draft for Comments)" to be released in the second half of this year stated that companies with pharmaceutical business licenses can operate pharmaceuticals online after filing, and qualified logistics and pharmaceutical companies can do pharmaceutical logistics distribution. The "Internet Food and Drug Operation Supervision and Management Measures (Draft for Comments)" should be implemented next year, and the threshold for online drug sales and logistics distribution will be greatly lowered. As long as pharmaceutical e-commerce has its own warehousing that meets the requirements of GSP, it can also operate online without building its own distribution company."

Sales volume experienced explosive growth for the first time

Long Yan said that it is precisely because of the imperfect distribution conditions and unclear national regulatory policies that most pharmaceutical retailers are still taking a wait-and-see attitude towards e-commerce, and only a small number of pharmaceutical chains are currently testing the waters of e-commerce. "Opening an online pharmacy requires a large initial investment in technology and marketing, and there are currently no successful pharmaceutical e-commerce cases in the market. In addition, the offline pharmaceutical chains are doing well, the e-commerce distribution conditions are imperfect, and the national policies have not yet been relaxed, so currently only a small number of pharmaceutical chains are cautiously testing the waters of e-commerce."

But in 2015, the wait-and-see attitude of offline pharmaceutical chains will change. Long Yan analyzed that there are two main reasons.

First, the participation of Ali Health will accelerate the separation of medicine and pharmacy. Currently, retail pharmacies account for about 20% to 30% of the market share, which is 300 billion to 400 billion yuan. There are also more than 1 trillion yuan of prescription drugs sold in hospitals, and the country is expected to open online sales of prescription drugs as early as New Year's Day 2015. "The market is forcing the separation of medicine and pharmacy. How much of this more than 1 trillion yuan will flow into the market? All pharmaceutical chains will definitely compete for it, and the market structure will undergo major changes."

Second, new policies such as the "Internet Food and Drug Operation Supervision and Administration Measures" have been introduced to lower the threshold for opening online stores to sell medicines and improve the logistics and distribution conditions for pharmaceutical e-commerce. The high growth of pharmaceutical e-commerce will be noticed by offline pharmaceutical chains.

The reporter learned that Tmall Pharmacy released data showing that the sales of pharmaceutical products in Tmall Pharmacy on Singles' Day in 2014 increased by 315% year-on-year (excluding the sales of health products and tonic products in Tmall Pharmacy). In this regard, Long Yan said that the annual growth rate of online pharmaceutical sales is close to that of Singles' Day. "In 2012, the total online pharmaceutical retail sales were 1.2 billion yuan, and in 2013 it was about 4 billion yuan, and in 2014 it is likely to exceed 10 billion yuan. After the new policy was introduced in 2015, I estimate that the total online sales will be more than 30 billion yuan. Especially if Alibaba's prescription drugs are included, it is hard to tell how big this market is."

The increasing market concentration prepares for mergers and reorganizations

Long Yan told Ebrun that the current online pharmaceutical retail is basically in a homogeneous competition stage, which is similar to the competition points of other categories, but there are definitely many opportunities to stand out. "Because drugs are standard products, the country has a special system GSP monitoring, and there will be no quality problems. What everyone is competing for is price, service, and delivery speed."

Compared with traditional channels, Long Yan believes that online pharmaceutical retail will be more competitive in every link, and online and offline will gradually merge in the future. "The future of pharmaceutical retail will be a three-dimensional competition model, including commodity prices, customer experience, service level, etc., and the advantages and disadvantages of online competition will be magnified."

At the same time, Long Yan believes that the entrances to pharmaceutical retail will be diverse in the future. "There will be many entrances to drugstores, some from physical stores, some from PCs, and some from mobile terminals. Mobile terminals also have many entrances. There may also be virtual drugstores. For example, I am Dr. Long. I can give patients guidance on medication with my mobile phone. My online identity is a store."

It is the widening coverage of the Internet and the rapid growth in scale that Long Yan believes that the concentration of the pharmaceutical chain industry will become higher and higher in the future, and large national chain enterprises will emerge. "At present, pharmaceutical chains are basically very strong in a certain region, and there is no real national pharmaceutical chain. When the market concentration becomes higher in the future, small regional chains will have a hard time, and some will be acquired or reorganized by large chains."

New model of service company emerges

The reporter learned that 111 Medical Hall Pharmacy has established a private hospital in Gansu. Long Yan told Yibang Power Network that this is a layout for online retail of prescription drugs. "If I need to sell prescription drugs online, I need a hospital to help us prescribe. So I set up a non-profit private hospital myself, so that we have a dedicated team of doctors to serve consumers online."

Long Yan believes that once the pharmaceutical e-commerce explodes, building private pharmaceutical companies is only one of the means that pharmaceutical chains will adopt, and the innovation and changes in services will definitely be more abundant. "Take customer service as an example. Online drug sales cannot rely solely on robots. Consumers need to be provided with personalized interactions and consultations, which requires a professional consulting team. Therefore, in the future, in addition to general customer service, 111 Medical Hall online pharmacies will also need professional doctors and pharmacists. Doctors can prescribe and pharmacists can review prescriptions, and these can all be done remotely."

Traffic entrance is controlled by BAT

Regarding Baidu, Tencent and Alibaba competing to develop pharmaceutical e-commerce, Long Yan believes that the investment of the three major companies in the pharmaceutical field will quickly boost the pharmaceutical online retail market, and Alibaba has a more obvious advantage. "All three companies started from the mobile end. Alibaba's biggest advantage is that it has a first-mover advantage, a stronger brand influence, and has obtained the most complete pharmaceutical regulatory codes. They will clearly define the entire drug flow route, and will definitely control the online pharmaceutical retail landscape in the end, and will affect upstream pharmaceutical manufacturers because they have big data."

In addition, Long Yan also analyzed to Ebrun that it is very costly for pharmaceutical e-commerce to do independent B2C. In the short term, pharmaceutical chains will definitely rely on large platforms such as Alibaba to develop e-commerce. "Pharmaceutical online retail will probably follow the Didi Taxi model in the end, but Didi Taxi in the pharmaceutical industry is a large platform such as BAT. As a pharmaceutical chain, it must hold on to the platform to develop."

The reporter learned that 111 Pharmacy's e-commerce positioning is a website that specializes in drug sales. It currently has more than 200 chain stores in more than 20 cities in Beijing, Gansu and Shaanxi. Longyan started in Jinchang, Gansu, and moved its headquarters from Gansu to Beijing during its expansion. 111 Pharmacy has been trying e-commerce for three years and has experienced two Double 11s. The e-commerce team has more than 200 people, including 40 to 50 people in logistics. This year, on Double 11 in 2014, the total online sales reached 9.67 million yuan, and the sales on the Tmall platform reached 8.67 million yuan, ranking sixth among Tmall Pharmacy.

Source: Ebrun Power Network