The increasing importance of e-commerce
The e-commerce trend has long since reached the healthcare industry and poses great challenges for the supply chain and digitalisation. Andreas Olpeter, Vice President Sales & Business Development Healthcare at Arvato Supply Chain Solutions, and Fabian Kaske, explain in an interview where action is needed now and how we can support our customers on their way to an optimal e-commerce strategy.
The new demands of customers & patients
How do you assess the increasing importance of e-commerce solutions in healthcare logistics?
Andreas Olpeter: E-commerce is everywhere and of course we also see a rapidly growing number of many examples in the healthcare sector where the ever faster progress of digitalisation is giving rise to new "electronic business models". This increasing networking of those involved in the healthcare process is changing established processes - naturally also in the logistics of medical products. What was unthinkable many years ago is now done with the click of a mouse or an ordering app - and customers' expectations are evolving accordingly. This applies to both areas, B2B as well as B2C. While e-ordering and e-invoicing are increasingly used in the B2B environment, we still see a dynamic development in the B2C area.
Fabian Kaske: Healthcare logistics is following the consumer megatrends with a certain delay. E-commerce is disrupting all levels of trade and thus offers great opportunities for first movers and early adopters. B2C e-commerce has made a start and is already well advanced with a 25% share of sales in the German OTC market. The digital purchasing advantages that buyers at all levels of trade are familiar with from the private sphere are now also expected for the B2B world.
Likewise, digitalisation offers opportunities for direct-to-consumer mind games on the part of manufacturers, in which pharmacies could be left out in certain cases in the future.
Can you give an example of this?
Andreas Olpeter: With pleasure. Let's take, for example, a 64-year-old diabetic who has been successfully treated with a certain insulin for many years and let's just call him Mr Schmitt. The "replacement" for his insulin looks like this nowadays: Mr Schmitt calls his doctor in the morning and asks for a new prescription to be issued. He is told that he can pick it up at the doctor's office around noon. No sooner said than done: a few hours later, Mr Schmitt enters the doctor's office and hopes that his prescription is already ready for collection. Unfortunately, this is not yet the case and he has to be patient a little longer and take a seat in the crowded waiting room. A short time later, the prescription is finally handed over to him and he continues to the pharmacy around the corner. The pharmacist notes with regret that he does not have this particular insulin in stock at the moment and therefore has to order it from the wholesaler first. So a few hours later, Mr Schmitt goes back to the pharmacy and finally gets his insulin.
And now, of course, Mr Schmitt wonders why there is always such a fuss about his prescription and the insulin, while everything else can be conveniently ordered on the internet and delivered to his home.
Customer and patient expectations are changing. The healthcare sector is only one of many sectors and - what is already "normality" elsewhere - will also become more and more common in the healthcare sector. The customer or the patient expects this and Amazon & Co. are leading the way. E-commerce is experienced as convenient, fast, secure and (due to increasingly transparent price comparisons) usually also cost-effective.
Of course, not everything can be done "online" and we need our local doctors and pharmacies. But the emphasis is shifting.
The industry is changing rapidly and manufacturers of medicines and medical devices are increasingly looking for new, direct delivery models. And here, of course, fast and secure logistics play a decisive role.”
Fabian Kaske: A great example.
Four out of five Germans now shop online and are familiar from other sectors with the many advantages that online shopping offers - including greater convenience and discounted products.
In the over-the-counter market, every fourth euro is already invested online.
Interestingly, our 64-year-old Mr Schmitt is one of the most frequent online pharmacy customers, as he feels the price and convenience benefits most strongly due to his increased regular needs.
Challenge - Online pharmacies
Mr Kaske, you just mentioned the topic of online pharmacies. What is it about online pharmacies?
Fabian Kaske: Since the approval of mail order in Germany in 2004 with pioneers such as Sanicare Versandapotheke in Bad Laer, online pharmacies have been a real success model, which has gained additional momentum through the Covid-19 accelerator. Overall, the 20 largest mail-order companies divide the market among themselves and German mail-order companies, such as Medikamente-per-Klick or Apodiscounter are at well over €100 million in turnover. In contrast to other sectors, the online pharmacy world is still relatively broadly distributed among a number of medium-sized and large providers.
However, the two listed industry leaders, Shop Apotheke and DocMorris, set the tone and their turnover will (soon) exceed the billion euro mark. This naturally brings a certain purchasing power and pressure on the supply chain.
Andreas Olpeter: I can agree with Fabian on this. We at Arvato Supply Chain Solutions have been a leading service provider for online pharmacies for years and see a clear trend. Since the Corona pandemic, logistics volumes in the online sector have increased significantly - even doubling in the first wave. Many patients and end customers have ordered their health products and medicines "online" for the first time by mouse click and have stuck with it. This is also part of the new normality since the pandemic.
We are talking a lot about medicines right now. But what about the development of other healthcare products?
Andreas Olpeter: Instead of continuing to rely primarily on retail levels, medical technology and pharmaceutical companies are increasingly discovering their end customers - the patients. Be it innovative measuring devices for continuous blood glucose monitoring for diabetics, heat patches, vitamins and minerals or - which is already possible today via or in connection with mail-order pharmacies - prescription drugs: end customers expect web shop ordering just as much as PayPal payment or next-day delivery.
It is also important that manufacturers must offer cross-national concepts. In this respect, internationalisation and scalability already play an important role in the early concept phase.”
E-commerce in the high-price segment
In the health sector there are also very complex and expensive therapies. Will e-commerce lead to changes here as well?
Andreas Olpeter: It already does. Please let me take another concrete example: Patients suffering from a so-called lysosomal storage disease ("LSK", e.g. Pompe's disease) are dependent on regular infusions of very expensive medicines.
These infusions usually last several hours. Due to the regulations in the benefits catalogue of the statutory health insurance, however, specialised nursing services are not remunerated for such infusions, which is why the only option is to go to hospitals or dialysis centres. This is of course a great burden for the patients and their environment. We talk a lot these days about the Corona-related right to home office - but why don't such patients have the right to homecare, which would be an enormous therapy relief for them? Here, too, e-commerce can help.
Instead of isolated action by all those involved in the therapy process (patient and private environment, manufacturers, doctors, pharmacists, laboratories, homecare companies), the interaction of these stakeholders is necessary and long overdue in Germany. With care management via a digital platform, the efficiency can be increased, safety increased and ultimately the health situation of the patients concerned can be significantly improved. For example, patients can use an app to influence treatments themselves by booking their infusion appointments.