High street chemist chains such as Boots, Lloyds and Rowlands haven’t had the best year. Boots last week reported an 18% drop in profits, competitor Lloyds fell to a £181 million loss last year and Rowlands is getting rid of 70 stores. Some believe that a significant contributor to these tradition chemist woes is poor customer service and a failure to adapt to the modern convenience economy. If that’s the case, a queue of would be ‘digital disruptors’ is now forming to take their business.
For example, most branches of Boots only deliver prescriptions if the patient is housebound and physically unable to make it into their local chemist to pick up. New generations used to ‘click and get’ models across the rest of their consumer lives are no longer willing to accept the delivery model for medicines should be any different. And online-online start-ups are more than happy to service this requirement if traditional high street chemist chains will not.
The prescriptions market in just England, calculated by those processed by NHS England, is worth £8 billion annually. There are around 29 million people on repeat prescriptions in the country. But the last stage of delivery – a patient going into the chemist and picking up their subscription – hasn’t really changed since the prescription model started almost 300 years ago. Still less than 1% of prescriptions transaction are made online.
New digital entrants to the market believe that could quickly rise to 10%-15% over the next few years. And they are determined to sweep that up at the expense of the likes of Boots, Lloyds and Rowlands, who are proving slow to adapt their own business models. The biggest digital player is currently Leeds-based Pharmacy2U, whose CEO Mark Livingstone explains:
“We can have 10% of all repeat drugs dispensed. That makes us a billion-pound business”.
The biggest challenges facing digital disruptors in the sector is integration with NHS services and being able to advise and talk to patients, explaining to them how and when to take their medication and providing information on any potential side effects. The latter service is the only part of the prescription dispensing business the industry sees as being harder to automate.
However, online pharmacies are developing, acquiring or partnering with apps and services that help mitigate this lack of personal touch. PillTime, for example, is an online-only NHS chemist that delivers prescriptions. Other than home delivery, the company’s value-added is that it sorts medication into clearly labelled pouches of individual doses to help patients take their prescriptions correctly.
Echo is another NHS-approved online pharmacy with a similar approach. Its service works in conjunction with an app that sends users alerts when they have to take their medicine as well as notifying them when their current supply is beginning to run low. Founded by Sai Lakshmi and Stephen Bourke, the former previously a business development manager for Apple and latter BT’s former head of strategy, Claire Anderson, one of the company’s three clinical advisors explains:
“For people like me who are very busy professionals, it’s perfect. All I need to do is set it up, and my medicine is delivered, I get reminders when I need to take my medicine and I get told when I need to reorder — it’s a nice slick app.”
High street chemists will have to start to up their own game if their recent slide is not to represent the beginning of a wider pattern of being left behind by more convenient, digitally-led competitors.