Supporting the next generation of digital pharmacies

This year marks the 20th anniversary of the UK’s first internet pharmacy and the sector has steadily increased, particularly after the 2005 rule change that meant they could start filling NHS prescriptions.

As the largest supplier of category ‘POM’ medicines to pharmacies, we’ve seen a clear increase in online dispensing for certain segments of patients and for certain medicines, where digital routes can be more convenient than in-person collection. The ability to provide, wrap-around remote advice and just-in-time delivery, create opportunities for a new type of digital pharmacy that combines traditional dispensary services with the convenience and user experience you might associate with digital services such as Uber, Deliveroo or Nutmeg.

Online dispensing is still emerging as a healthcare delivery model and has not yet fully developed. One of the reasons for this is that the online pharmacies we speak to marry agile digital technologies with the highly regulated and complex market for medicines. Success requires a deep understanding of the limitations and opportunities provided by both these very different arenas, as well as an ability to traverse between them and execute a new idea in both at the same time.

Challenges for digital pharmacies

One of the challenges new types of pharmacies face is that of ensuring a reliable supply of the medicines that they and their customers need.

Traditional community pharmacies do, at least, have the advantage of being able to predict how many repeat prescriptions and walk-in customers are likely to require different classes of medicines in a given week as they will tend to have a fixed catchment area and patient pool.

The supply chain for medicines is complex and surprisingly volatile. Products can go in and out of stock at different stages of the supply chain and the problem of reliably purchasing the correct amount of input medicines for the number of patients you will serve can be even more challenging for high-growth digital pharmacies.

“A digital pharmacy can grow very quickly and might require twice or three times the volume of drugs that they needed in the previous month as they grow. For those that are successful, the more they expand, the more likely that growth constraints will kick in”

A digital pharmacy can grow very quickly and might require twice or three times the volume of drugs that they needed in the previous month as they ramp up operations and grow. For those that are successful, the more they expand, the more likely that growth constraints will kick in.

Additionally, new entrants to the sector also have to come to terms with the complexity of the regulatory environment and develop new online services while still remaining compliant with all of the different interlinking requirements from multiple regulators. Driving new concepts while always maintaining patient safety, pharmacovigilance reporting and medicine stability require specialist knowledge that start-ups may not have at inception. While digital businesses in other sectors may be built under a ‘move fast and break things’ mindset, for obvious reasons this is completely incompatible with the delivery of medicines to patients.

For our part, Accord Healthcare is still quite a young company in pharmaceutical industry terms. We only established European operations in 2008, but we’re a dynamic firm and experts in medicine supply chains, compliance and logistics. So, as we speak to new pharmacy start-ups, we’re able to offer a tailored package of support depending on what each disruptor or digital pharmacy requires, thanks to a new initiative.

Driving pharmacy innovation

Located in our new UK distribution hub in Didcot, Oxfordshire, the Accord digital pharmacy incubator offers a package of support to help digital dispensing businesses accelerate their growth and navigate the complex requirements of medicine delivery.

Digital healthcare is a huge universe, but Accord is focused on innovators to whom we can provide the greatest impact, so our partnerships target new ideas in the delivery of medicines to patients, and supportive tools to enhance the experience of patients on medications. Accord is building a platform for these innovators to launch their concepts. This can take many forms, including patient support apps, websites and rapid delivery systems for medicines – we’re even talking to engineers creating  intelligent dispensing robots for patient’s homes.

One of the pharmacy start-ups we’ve worked with so far is Manual, who we met when they were at a very early stage idea and had not yet formed a business. The team behind the online pharmacy are a couple of really talented people who have a number of years’ experience building digital brands. Most recently some of them had worked at Deliveroo and helped grow the online food delivery company into the giant that it is today.

The Manual team wanted to create a new men’s wellness brand and tap into the need they had identified of adult men who didn’t feel comfortable talking about embarrassing problems in a busy local retail pharmacy.

We helped to talk them through the issues involved with starting an online pharmacy and mentored them on a wide range of issues. After raising about £5 million in venture capital funding they opened their own dedicated GPhC-registered pharmacy, located within our Didcot distribution hub.

As they grow their product range and develop new concepts, they will be directly able to tap into our expertise and logistics because they have integrated with our supply chain. It’s a really innovative way of working together and one that’s never been done before as far as we’re aware.

Pharmacy 2.0

So far, I would say we’re only really scratching the surface of what could be done in terms of collaborations between pharmaceutical specialists and manufacturers such as ourselves and a wider range of digital disruptors, including emerging online doctor service platforms.

Looking at Accord Healthcare initiatives such as our digital pharmacy incubator, they are all driven by our broader mission to try and improve the way that medicines are provided to patients to widen access and to make things better for patients, pharmacists and all the stakeholders in our universe.

About the Author

Badri Nath Wadawadigi is head of growth initiatives at Accord Healthcare. Badri joined Accord in December 2016 and is charged with pro-actively sourcing, identifying and negotiating M&A opportunities that align with each of Accord’s M&A Focus Areas. Badri works with internal and external stakeholders to improve the skills, systems, processes and governance used by Accord to identify, evaluate and execute inorganic opportunities. Prior to joining Accord, Badri spent over 11 years leading execution of M&A deals at investment banks such as Jefferies, UBS and Credit Suisse. Badri has completed over 20 transactions (worth over €7bn), including for leading pharmaceutical companies such as Strides Arcolab, CB Fleet, Actavis, Aspen, Aurobindo and Claris. He has closed both public and private corporate acquisitions, sales and joint ventures across a variety of sectors in the UK, Spain, Belgium, Netherlands, India, Australia, Chile, UAE, the US and other geographies. Although primarily based in London he has also spent 3 years living in Dubai – working with sovereign wealth funds and family conglomerates across the MENA region.