Study: Net Pharmacies Coming of Age

A new report by Forrester Research predicts that an emphasis on infrastructure and high-level services will allow online pharmacies to emerge as e-commerce success stories over the next two years.

“Forrester believes that online pharmacies will rise to the challenge of selling prescription drugs online — ringing up $15 billion (US$) in sales in 2004,” analyst Elizabeth W. Boehm wrote in “The ePharmacy Opportunity.”

The new findings are in line with a report that the Cambridge, Massachusetts-based research firm released earlier this year, indicating that online consumer healthcare spending will reach $22 billion by 2004.

Obstacles To Overcome

Although the demand for online fulfillment of prescriptions is growing rapidly, many e-pharmacies are struggling to solve some problems that inhibit sales, including insurance company policies that allow patients to use most offline pharmacies but limit them to a single mail service provider for bulk buying discounts.

Additionally, many patients cannot wait for deliveries — which are often delayed due to the time required to verify prescriptions — and therefore turn to brick-and-mortar pharmacies.

Online pharmacies are also restricted by a fragmented regulatory system that drains resources by requiring them to comply with myriad state requirements.

Building a Strong Foundation

Forrester says that e-pharmacies will overcome these obstacles in the next few years by building relationships that support online prescription sales. One of the first steps will be to integrate with insurer systems to provide the same real-time co-pay information that offline stores provide.

The report predicts that e-pharmacies with brick-and-mortar partners will go beyond order entry systems and unify customer experiences across channels. Online pharmacies are also expected to help drive electronic prescription adoption by creating a standard interface. They will also lobby for uniform standards across state regulations.

Boehm said, “To meet growing demand and capture market share, [e-pharmacies] will build a strong foundation to deliver products and leverage compliance services that boost revenues.”

Patient Compliance Programs

Forrester expects that once e-pharmacies have established a secure foundation, they will turn their attention to compliance programs. According to the research firm, nearly half of all patients fail to take their medication as prescribed by their doctors, and unfilled prescriptions cost pharmacies about $25 billion annually in lost sales.

According to the study, savvy e-pharmacies will strengthen ties with customers by developing interactive compliance programs that will send e-mail reminders when it is time to fill prescriptions, and encourage patients to take their medications.

The report predicts that interactive compliance programs will not only improve patient care and enhance communications with physicians, but also add $1.3 billion in incremental health sales by 2004.

Successful online pharmacies must also offer patients interactive treatment tools and site-sponsored support groups that complement drug therapies, Forrester says.

New Level of Cooperation

The study predicts that the Internet will introduce a level of coordination between pharmacies that does not exist offline. Forrester says that e-pharmacies will specialize to maximize penetration by defining their audiences according to insurance plan, locality, or condition, and then honing their services to address the specific needs of a community.

Additionally, in an effort to maximize reach, e-pharmacies with brick-and-mortar partners will offer the option of ordering a prescription online and then picking it up at a local pharmacy. Brick-and-mortar stores without their own online presence will form online alliances with real-world competitors in complementary geographic regions to create national brick-and-mortar networks.

Growing Number of Drug Buyers

Currently, online prescription purchasers make up five percent of all Internet users, a figure that exceeds the number of online flower purchasers at four percent of all online users.

Forrester says that with 100 percent growth expected over the next six months, the number of online drug purchasers is expected to catch up with reported figures for users who buy more popular items, such as the 9 percent of Internet users who have bought videos and the 14 percent who have bought music online.