Pharma’s Digital Retail Platforms: Can They Compete with Integrated Online Pharmacies?

In 2024, Pfizer and Eli Lilly launched new patient-targeting online platforms to support drug sales. As more companies follow suit, the question remains: Can digital pharma retail platforms compete with online pharmacies and their broader offerings? Find out in the latest report from Research2Guidance.

The Pharma Digital Retail Model (PDRM) is a strategic approach that leverages digital platforms to improve patient access to medications, drive sales, and gain deeper insights into patient behavior and needs.

The latest R2G report, “Digital Retail Platforms: Pharma’s New Direct-to-Patient Sales Model,” explores how pharmaceutical companies are adopting this emerging channel to boost drug sales.

With this model, pharma companies are entering direct competition with online pharmacies and other integrated solution providers. Several competitors offer similar one-stop-shop solutions, including online pharmacies and health coaching providers that combine medication with coaching services such as Noom, Juniper, and GoLighter, which integrate GLP-1-supported weight loss programs.

The biggest competitors of the DPRM platforms are the offerings of the large and integrated online pharmacies and healthcare providers (IOP). The key question will be whether the pharmaceutical companies can attract enough users/patients for their very specialized offerings, or if patients will prefer the broader range of medications and treatments available through the more comprehensive IOPs.

A certain level of mistrust can be seen among the pharmaceutical companies, which is reflected in the very low value-added coverage.

IOPs, such as Walgreens, CVS, and Walmart, are designed to meet a broad range of healthcare needs through their physical clinics and digital platforms. They focus on providing accessible, generalist healthcare services, including urgent care, primary care, vaccinations, and prescription fulfillment. IOPs cater to a wide range of health conditions without specialization.

IOPs typically provide a much broader scope of value creation, extending to the establishment of their own healthcare provider units for telehealth, as well as outpatient and inpatient healthcare services. However, the in-house model of IOPs comes with high operational costs and infrastructure requirements, which have led to recent downsizing efforts, such as Walgreens reducing its VillageMD footprint and Walmart closing several health centers.

The primary differences between these two models lie in their scope, delivery methods, and operational strategies. IOPs emphasize breadth, offering in-person and telehealth services for a wide array of conditions. Digital Pharma Retail platforms operate in a niche segment but with a similar value for the targeted patients.

Breadth of the range of medications/brands: IOP’s medication range is many times greater than that of the DPRM providers. The lack of breadth of the DPRM providers’ offerings is likely to lead to less interest in the niche offering among patients in the target group (especially those with multiple diseases). Because the IOP providers are brand agnostic, patients are also likely to assume greater neutrality.
Depth of value creation: This is where another big difference between the models lies. Until recently, IOP providers were still trying to expand their own offerings to include entire clinics and their own doctor networks. They wanted to provide patients with their own offerings along the entire patient journey. However, these efforts have been scaled back or completely abandoned in the last 1-2 years due to unfulfilled expectations. The much more cautious approach of DRPM providers with a very small share of their own in the value added should prove advantageous here.
Target group size: By definition, there are big differences between competing offers. While IOP providers focus on all patient groups, DPRM providers have so far only concentrated on a handful of patient groups, which reduces the market potential of niche offers.
Patent journey support: Both groups of providers offer almost the same support for patients along their journey, just for fewer or more patient groups. The assumption is that patients with only one illness and limited medication needs will find it easier to get support from niche offerings than from full-service providers.

Compared to their main competitors, DRPM providers have a chance in their limited target group, especially among patients with a small number of different medication requirements. Their low share of added value and thus low operating costs should give providers time to continue expanding their offerings with sustained viability.

Explore more on this topic in these articles:
Pharma’s Digital Retail Platforms: The Future Standard for Selling Drugs Online?

and

Digital Retail Platforms: The New Concept of Pharma to Sell Directly to Patients

Or download the report here