Marcos Pascual
Commercial Director

Doctors at the Point of Sale: Key Strategy for Small Pharmacies

Wed, 09/05/2018 - 09:26

As pharmacy chains expand their reach across the country, small, independent pharmacies need to rethink their strategies to retain and even gain ground, says Marcos Pascual, Commercial Director of the Mexican Association of Pharmacies (ANAFARMEX). “Small, traditional pharmacies are in a vulnerable position because they have lost significant market share due to the growth of pharmacy chains and self-service stores, which can negotiate much better prices and offer lower costs to final clients,” he says.

ANAFARMEX represents over 15,000 pharmacies throughout the country, including small pharmacies and chains of all sizes. According to Pascual, in 2017, Mexico had 33,000 private pharmacies, of which about 18,000 were small businesses. He adds that the number of pharmacies is expected to continue growing during 2018 at a 3-5 percent rate. “About 20 years ago, the Mexican pharmaceutical market was valued at MX$90 billion and in 2017 its value was approximately MX$220 billion,” says Pascual.

While independent pharmacies have lost ground, they will not go away as they fill a specific market niche, explains Pascual. With doctors at the point of sale, pharmacies provide care to those who, due to time or distance constraints, cannot visit public healthcare institutions. “There are now about 18,000 doctors present in pharmacies, generating an average of 500,000 daily prescriptions. Doctors at the point of sale are a driver for these small pharmacies.” Small pharmacies have also evolved over time, which has helped keep them afloat. “They used to focus mainly on patented medicines; now, generic medicines represent 80 percent of total sales. Furthermore, 80 percent of generics were sold under the pharmacy’s brand.”

ANAFARMEX also provides training to pharmacists and doctors. In the latter case, the association is now focusing on increasing prevention. “The current model of care requires visiting a doctor only when there is a problem, but it is necessary for medical professionals to switch to a preventive model,” says Pascual. Through ANAFARMEX, pharmacies are joining a new scheme to promote prevention especially in the case of chronic diseases. Pascual sees great

benefits in preventive models and points out that other companies are also investing in them. He mentions, for instance, that Boston Scientific is investing in diagnostics for cardiovascular diseases. “Through platforms such as this one, patients undergo a simple test that measures blood pressure and following a small survey they are classified according to their risk to suffer hypertension.”

The association is also promoting a different business model. Pascual says that a significant percentage of medication distribution follows a fee-for-service model implemented by international companies with distributors and pharmacies. Under this scheme, distributors are assigned a specific area and the company pays a fee for the sale of the medication. “This scheme may also be good for traditional pharmacies, which would be given an additional fee for the storage and delivery of specific medications.”

While small pharmacies have their own unique battles to fight, they share other challenges with the rest of the sector, including the lack of universal electronic patient files, says Pascual. “Every institution keeps its own files and does not share them with other institutions when the patient changes doctors.” Pascual explains that the challenges at this point for all pharmacies include the development of electronic clinical files, the acquisition of more specialists and the entrance of new players to the market, such as retail stores. For instance, “FEMSA has 2,000 points of sale in Mexico and other countries and the company is still growing,” says Pascual. Amazon’s online sales model is another challenge. ANAFARMEX is promoting the sale of OTC products by e-commerce among its members to help meet this challenge. Nevertheless, even if e-commerce grows significantly, small pharmacies will continue to have a market niche. “Although home delivery of medications is becoming successful this will not cause the extinction of small pharmacies.”

Despite the potential hurdles ahead, Pascual sees a positive future for pharmacies wherein each caters to a specific market niche. “Small pharmacies will not disappear as there will always be a percentage of the population interested in personalized attention."