Amidst rising inflation, supply chain bottlenecks, labor shortages and talks of a looming recession, it’s no wonder manufacturers are starting to feel the squeeze of today’s economy on their margins. In fact, due to inflation alone, 73% of manufacturers from across industries expect to increase the prices of goods through 2022.
Pharma manufacturers are no exception. Unfortunately for the pharma industry, the stakes are particularly high. With debates over prescription drug costs continuing, pharma may risk public backlash if they hike prices higher to offset economic pressures.
But there is a way for pharma to reel in excess costs and increase user adoption without sacrificing margins — while still passing on the savings to patients: Launching a direct-to-consumer (DTC) e-commerce brand and selling prescription drugs to patients online.
Tapping the telehealth boom
Prescription drug e-commerce platforms aren’t a new concept. Consider the recent success of brands like Hims and Roman that make it seamless for patients to consult with a physician, get prescriptions and have medications shipped to their door — all without leaving their couch.
Patients are resonating with this simplified model. In fact, the use of telemedicine/telepharmacy products is up 38 times from early 2020. Particularly in the wake of the pandemic, patients are looking for easy ways to get the products that they need while skipping a costly, time-consuming, and potentially health-risking visit to the doctor’s office and local pharmacy.
There’s no reason why pharma manufacturers can’t take advantage of this momentum by launching their own DTC e-commerce brand. Here are a few perks of selling direct:
Cut out the middleman
Going DTC allows pharma manufacturers to bypass middlemen in their supply chains, meaning they’ll spend less time and capital negotiating with third parties, including pharmacy benefit managers (PBMs). This can be particularly valuable as controversy continues over the role of PBMs in rising drug costs in the U.S.
Increase patient adoption
Whether they are selling branded or off-patent drugs, cutting out the middleman presents a tremendous opportunity for pharma companies. Patients seeking out drugs they know well, like Viagra, may not get the name brand at the pharmacy, but they can purchase name-brand drugs directly from the pharma manufacturer instead — driving higher patient adoption. Selling off-patent drugs DTC can be incredibly profitable for pharma as well.
Pass off savings to patients
When pharma manufacturers move to a DTC model, they can increase profit without raising prices. It’s a win-win for both manufacturers and patients. Patients are paying the same, or in some cases, significantly less, than what they would at the pharmacy, while manufacturers offset the effects of inflation and other economic pressures on their bottom line.
Increased brand recognition
Launching a DTC brand can help manufacturers foster more meaningful connections with patients. Instead of reaching brands through a third party, patients will be building relationships with brands directly.
Because prescription drugs require patient upkeep, manufacturers who can foster a seamless and enjoyable patient experience will see higher customer return rates. Manufacturers learn more about their customer base through these interactions and can use these relationships to inform marketing strategies.
Up until now, pharma companies often lacked the expertise in necessary parts of the supply chain — like telehealth, distribution and digital marketing — and passed these services on to third parties. However, new e-commerce solutions, digital marketing platforms and backend tools have made it easier for pharma companies to take ownership of the entire supply chain.
While the effects of inflation may not be going away any time soon, transitioning a portion of the business to an e-commerce model may be one way to combat higher prices. As patients’ reliance and acceptance of telehealth and telepharmacy continues to grow, it’s time for pharma manufacturers to consider a promising future in e-commerce.
