Online drug sales growing
The number of orders in Canadian pharmacies increased by 77% in 2021 compared to the previous year. Over the same period, the amount of online sales increased by 89%. Average bill decreased by 9%. Full-fledged online trading in medicines decreased significantly compared to offline trading.
The analysis of they pharmaceutical market in Canada does not include online stores specializing in the sale of glasses and lenses, medical equipment, dietary supplements and other non-medicinal health products, and sales of medicines and other health products by universal online stores were not taken into account.
45% of all online orders of the 1000 largest stores in 2021 were made in online pharmacies – and this against the background of pharmaceutical deficit experienced by the country and amended only in part by import of drugs from overseas manufacturers. Only 7% was their share in revenue due to the low average check. In the online pharmacy sector, the conversion was 25%. The closest indicators are at pet shops and online stores of clothes and shoes. Mobile traffic accounted for 65%, customers often use smartphones and tablets to visit pharmacies. Only 35% of the traffic on these sites is on desktop computers and laptops.
To give you a feel of a sharply peaking interest in digital e-stores and doing the shopping chores on the go, here is an example of an app that was installed more than 260 thousand times on App Store and Google Play – and it is only one mobile app designed for CVS digital retailer, while the number of existing online drugstores is the order of magnitude above that. The peak of placement activity was in 2019. 69% of online pharmacies use their own CMS (CMS is a system for creating, managing and editing site content). The remaining 31% use other services.
As a growth factor, the researchers pointed to the general increase in customer interest in ordering online goods through the Internet. They also call factors such as the growing interest of pharmacy chains, online stores and portals in online drug sales in connection with expectations of cancellation or easing of restrictions on distance sales, the successful inclusion of loyal customers of pharmacy chains, especially regional ones, in the online ordering channel rare or expensive drugs.
Researchers have identified an increase in the number of marketplaces and the total number of pharmacies that they cover. Another trend – a further increase in the share of mobile traffic – with the prospect of its conversion in the near future to the active use of mobile applications.
Approximately 10% of the retail drug market will flow from offline to online each year (and at the beginning of the next decade, the flow rate can reach 15% of the market per year). The main drivers are the accumulation of experience (usually positive) of online orders, the recommendations of relatives and friends, and certainly the attractiveness of prices on-line. The legalization of home delivery, which will happen in the near future, will only slightly affect the overall growth rate – it is still essentially a premium service.
The online booking market for medicines and pharmaceutical products will continue to grow steadily over the next few years. The segment’s development is affected by an increase in interest in online services in general, as well as a number of other factors. These include increasing the digitalization level of the entire industry, in particular, the emergence and improvement of online services of large pharmacy chains, as well as the arrival of large IT players. In addition, the model of consumption of medicines among the population is being modified, more often they prefer to order products online, it is cost-effective, convenient and significantly saves time. Plus, unfortunately in remote regions, this is often the only way to get the right drug.
The share of online sales will increase significantly in 2022. This is evidenced by the results of surveys and the growth rate of online orders for drugs with self-delivery from pharmacies. People want to order medicine online because it is convenient. The share of online sales will depend primarily on the requirements of the law on distance trading. From the point of view of the long-term period, the level of 15% of offline sales seems stable.
In the United States, where online trading has been developing for more than twenty years, 90% of retail sector sales are still made in ordinary stores. According to statistics, the share of online orders has already amounted to 10% of all orders of the thousand largest stores. In this regard, the increase in the number of orders looks like a value close to the peak growth rate of this indicator. In 2020 and 2021, the increase in drug sales in physical terms in Canada amounted to 20% and 25% against 13% and 15% a year by year for the index of all goods, based on the achieved market share.
The sale of drugs by Canadian pharmacy online in 2022 will grow by 80%, and the estimate of this revenue may grow by 130%, as one of the gauges can find a way to evaluate the sale of drugs by universal Internet-stores. In the future, we can expect the market growth rates to remain at 50% for three to five years. There are at least four growth factors. First, an increase in the proportion of older generations on the Internet. Secondly, an increase in the average age of the Canadians as a whole. Thirdly, an increase in the experience of using the Internet by consumers, doctors and pharmacists, for whom the online infrastructure will be gradually created. As telemedicine develops, together with the consultation of a specialist, a patient will receive a link to the medicine, which should be sent to the basket. Finally, pharmacies, under the pressure of universal retail chains, will translate the business online, specializing in less popular types of medicines and trying to serve the selected segments of consumers.
Canada reduces medicines prices in 2022
The Government of Canada has announced amendments to the Patented Drug Regulations to revise the list of countries that need to be guided in setting drug prices. Thus, it is planned to save about $13,3 billion Canadian dollars over 10 years.
Last year, more than a million Canadians were forced to give up basic necessities, such as food and heat, to afford the necessary medicines read a statement accompanying the announcement of legislative changes.
On August 21, a new edition of the Patented Medicines Regulation will be presented, which will revise the list of countries with which Canadian regulators are checked by setting prices for drugs. It is planned to exclude the United States and Switzerland from this list, where prices are overly high and focus on countries that are similar to Canada in terms of population, economy and approach to health care. This initiative has been discussed in the country since 2019. Then there was evidence that every tenth resident of the country does not buy the necessary drugs because of the high prices for them.
According to the Minister of Health, Ginette Petitpas Taylor, new rules will become the basis for a new national drug program, including covering citizens’ expenses for prescription drugs. The updated Regulation will enter into force on July 1, 2020, which was specified in the Patent Medicines Prices Review Board. This structure determines that the cost of the patented medicine is overstated, and may order the patent holder to lower the price and compensate for the amount of excess income received by him.
7 crucial trends for changing pharmaceutical market
The burden of chronic diseases is increasing. The prevalence of chronic diseases, such as diabetes, is increasing everywhere. Since the increase in life expectancy forces many countries to raise their retirement age, more and more people will work at the time of the development of these diseases. Accordingly, the social and economic value of treating chronic diseases will increase. Pharmacies will have to lower the price of medicines to treat such diseases and rely on profits from their sales volume, not on prices, because many countries would not be able to afford them otherwise.
Healthcare regulators and payers are increasingly declaring themselves or influencing doctors’ appointments. As treatment protocols replace individual prescribing decisions, and target audience are also becoming more consolidated and more powerful, this significantly changes the sales and marketing models of companies. The industry will have to work hard to make a profit, collaborate with payers and healthcare providers, and work to improve patient compliance.
Pay-for-performance on the crest of a wave. An increasing number of health care payers rely in their decisions on the pharma-economic indicators of various drugs. The wide distribution of electronic medical records provides them with data on the results that are necessary to determine the best medical practice. This allows you to limit or stop taking products that are more expensive or less effective than comparable methods of treatment, and to pay for treatment based on its effectiveness. Therefore, Canadian pharmacies will have to prove that their medicines really work, provide value for money and better than alternative forms of intervention.
The boundaries between different forms of health are blurring. The primary health care section expands as clinical advances transform previously fatal diseases into chronic ones. The self-healing sector is expanding, as more and more products previously dispensed with prescription receive over-the-counter status. In those cases when the treatment goes from inpatient to outpatient, the needs of patients also change. Thus, the need for informing a patient about the rational use of medicines, as well as the introduction of additional services, for example, home delivery of drugs, is increasing.
Markets in developing countries where drug demand is expected to rise most rapidly over the next 13 years are very diverse. Developing countries have very different clinical and economic characteristics, health systems and attitudes towards the protection of intellectual property. Any company that wants to serve these markets will need to develop strategies tailored to individual local needs.
Many governments are starting to focus on prevention rather than treatment, although investments in preventive measures are not yet active enough. This change in emphasis will allow pharmacies to enter the field of healthcare management. But if this is done, companies will have to rebuild their image and take care of the company’s reputation, since medical workers and patients will not trust the industry to represent their interests if they are not sure of the sincerity of its intentions.
Regulators are very reluctant to take risks. Leading national and international agencies have become more cautious in approving truly innovative medicines.