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OTC DISTRIBUTION
DISTRIBUTION OTC
Celesio’s acquisition of mail-order pharmacy DocMorris has put the spotlight
firmly on the anticipated changes in the way medicines are distributed in
Europe. Deborah Wilkes looks at the prospects for pharmacy chains.
“With this step,Celesio gets hold of the is also bullish about the prospects for liberal- isation in other important countries in the med- Figure 2: Breakdown of ownership of 126,152 pharmacies in eighteen European Figure 4: Breakdown of pharmacies in a chain comprising two or more branches in Celesio will “definitely not leave the field open to countries in 2006 (Source – James Dudley Management) 2006 by country (Source – James Dudley Management) others, and most certainly not to companies that are erle, unveiled Celesio’s acquisition of DocMor- taking action against pharmacy ownership re- foreign to the pharmaceutical market”, says Fritz strictions in Austria, France, Italy and Spain Oesterle, chairman and chief executive of Celesio portion of pharmacies in a chain at 98.1%, with chains in the UK, and the Kruidvat and Trek- its pharmacy ownership rules. It has concerns “The purchase of DocMorris is a logical (OTC bulletin, 30 March 2007, page 7), Oest-
Alliance Boots, Celesio and Phoenix owning pleister chains in the Netherlands. And lead- about France’s requirement that anyone want- step with regards to the expected liberalisation erle said the pharmacy market was opening up as well as the privatisation of publicly-owned the vast majority of pharmacies in the country ing supermarket groups might also have a go.
ing to open a pharmacy should be a qualified of the German pharmacy market by the Euro- across Europe. “We will use these opportuni- Discussing Celesio’s branding strategy for pharmacist and should belong to a professional pean Court of Justice,” added Oesterle, point- ties for growth – wherever practical – and will As can be seen from Figure 1, Celesio’s pharmacies, a group spokesperson told OTC
organisation. This prevents anyone from own- ing out that Germany’s Celesio was sending “a definitely not leave the field open to others, and Pharmacies division recorded a double-digit in a chain comprising two or more branches, bulletin that Lloydspharmacy would continue
ing more than one pharmacy as well as the de- clear signal against discounters, and both nat- most certainly not to companies that are foreign rise in turnover to C3.27 billion in 2006. How- notes the Dudley study, more than half are in to be valuable in English-speaking markets, ional and international interested parties not to the pharmaceutical market,” he pledged.
ever, Celesio only operates pharmacy chains while DocMorris might be viable in Scandin- related to the pharmacy business”.
Existing national regulations on pharmacy in seven European countries, and more than avia and eastern Europe. Even if southern Eur- letter of formal notice, which is the first stage According to Oesterle, it had been vital to ownership are clearly curbing Celesio’s ambi- two-thirds of the division’s turnover is gener- ‘virtual’ chains – independent pharmacies affil- opean pharmacy markets were liberalised, add- of the pre-litigation procedure. The next stage act quickly to ensure that Germany’s leading iated to buying groups, often under the control ed the spokesperson, the DocMorris name was would be the release of a reasoned opinion, giv- pharmacy brand did not fall into the hands of Only a small number of countries in Europe Rival pan-European retailer and wholesal- of wholesalers – is on the increase in Europe.
unlikely to be accepted in countries such as ing a detailed statement – based on the letter of a foreign owner or an investor from outside the – including Belgium, the Czech Republic, Ire- er Alliance Boots is in a similar position. The In Germany, for instance, Celesio runs the Com- formal notice – of the reasons that have led the pharmacy services market. “There is nothing land, the Netherlands, Norway, Switzerland and group has a network of around 3,000 retail out- mitment programme for independent pharma- Meanwhile, Stefano Pessina, executive de- lets, including associates, of which about 2,700 cies, wholesalers Anzag and Sanacorp offer Viv- puty chairman of Alliance Boots, is keen to ex- member state concerned has failed to fulfil one There is nothing more powerful than an idea have a pharmacy. However, the vast majority esco and Meine Apotheke respectively, and the tend the Boots brand into continental Europe, are part of Boots the Chemists and Alliance marketing association of German pharmacists, according to an interview in The Daily Tele- Pharmacy
Pharmacy in the UK, with the remaining 400 graph newspaper. Pessina acknowledges, how- chain (%)
chain (%)
more powerful than an idea whose time has macists, while others keep pharmacies under spread across Ireland, Italy, the Netherlands, The Dudley study points out that around a ever, that it will “take time” to get European state control. And several allow pharmacists to quarter of pharmacies in the 18 countries cover- With the DocMorris brand in the bag, Cel- own chains, but restrict the size to two, three The third major pan-European retailer and ed by the study are members of virtual chains.
One country already planning to liberalise esio clearly believes it is well-placed to capi- wholesaler, Phoenix, also owns pharmacies in Germany and France – two of the countries its pharmacy market is Sweden, where the state- talise on the anticipated arrival of pharmacy Nevertheless, Celesio and rival pan-Euro- some countries, including Norway and the UK. where large pharmacy chains are not permit- controlled body Apoteket owns all pharmacies.
chains in Germany. Currently, pharmacists can pean retailing and wholesaling companies are These three groups already dominate phar- ted – have the highest proportion of pharma- At the end of last year, the newly-elected gov- only own and operate a maximum of four out- building up substantial retail presences wher- maceutical wholesaling in Europe. A new OTC cies in virtual chains (see Figure 3).
ernment appointed a special commission to lets, and third-party pharmacy ownership is ever the law permits. They have responded rap- distribution study from OTC marketing strate- look into ways of introducing competitors to idly to the gradual deregulation of pharmacy gist James Dudley notes that they accounted Apoteket and to consider the possibility of put- legislation, particularly in northern Europe, for around half of the market in 20 key coun- Clearly, the arrival of pharmacy chains in ting some non-prescription medicines on gen- big European pharmaceutical markets – such eral-sale outside pharmacies. The commission The Dudley study points out that the vast as France, Germany and Spain, each with more is to report back by the end of 2007.
Annual sales
Number of
majority – 86% – of the 126,152 pharmacies than 20,000 pharmacies – could transform the “Whether Sweden’s pharmacy market will (E millions)
2005/2006 (%)
pharmacies
in the eighteen European countries covered by retailing businesses of companies like Alliance be more attractive for having been liberalised, the study remain independent. Of the 14% in Boots and Celesio. According to the Dudley largely depends on how the current 850 state- a chain comprising two or more branches: 6% study, major wholesalers could be capable of run pharmacies are released into the compet- are part of a minor multiple consisting of 2-50 building up European chains comprising as itive market,” commented Oesterle. “Celesio branches; 5% are in a chain owned by interna- will definitely give its backing to a fair system tional wholesalers such as Alliance Boots, Cel- As flagged up by Celesio’s Oesterle, play- of liberalisation for the Swedish pharmacy mar- esio, OPG and Phoenix; 2% are state or munic- ers on the margin of the pharmaceutical mar- ket and will be very insistent on this.” ipality owned, mainly in Italy and Sweden; and ket might also be keen to grab a piece of the 1% are in cooperatives (see Figure 2).
action. The Asian group AS Watson is one to putting pressure on a number of countries over The Dudley study highlights that excluding watch, with its existing presence in the health Figure 3: Proportion of pharmacies in a chain of two Sweden – where all pharmacies are state-own- and beauty sector encompassing the Rossmann Figure 1: Turnover of Celesio’s Pharmacies division in 2006 and number of pharmacies at 31 December 2006 or more branches or in a virtual chain in 2006 for 18 broken down by country (Source – Celesio) ed by Apoteket – Norway has the highest pro- chain in Germany, the Superdrug and Savers mission asked France to supply information on countries (Source – James Dudley Management) OTC bulletin 30 April 2007
30 April 2007 OTC bulletin
OTC DISTRIBUTION
or more of its obligations under the Treaty or million last year, and claims to have 850,000 other European Union legislation. The action against France follows similar moves against Austria, Italy and Spain (OTC bulletin, 31 July
consistently pushed the boundaries of medi- cines distribution, resulting in a steady stream of lawsuits brought by German pharmacists and that it was taking Italy to the European Court their trade associations. Both its activities and of Justice over restrictions imposed by its nat- pharmacists’ responses have also given it a high ional legislation on who can acquire and own profile with the general public. Dudley points retail pharmacies. At the same time, it formal- ly requested that Austria and Spain “amend the DocMorris name and associate it with “dis- their national rules relating to the setting up DocMorris is now seeking to capitalise on this reputation in Germany with a franchise scheme for pharmacies. Around 20 pharmacies have already adopted the DocMorris name and country’s ban on non-pharmacists owning and green livery, and the firm is seeking to build a OTC marketing strategist James Dudley maintainsthat the greater choice available to consumers operating pharmacies by seeking a licence for virtual chain of 500 pharmacy partners within across Europe is putting pressure on pharmacies to its store in Saarbrücken. At present, the Doc- the next three to five years (OTC bulletin, 25
Morris pharmacy is free to operate, although a lawsuit brought by several German pharma- initiative from Boots the Chemists in the UK, cists and pharmacists’ associations has been re- ing its franchise scheme have on average dou- which gave men the opportunity to obtain Pfi- ferred to the European Court of Justice (OTC
bled their turnover and, in many cases, trebled zer’s prescription drug for erectile dysfunction, bulletin, 16 April 2007, page 9).
Viagra (sildenafil), directly from selected stores Dudley points out that the pharmaceutical (OTC bulletin, 27 February 2007, page 18).
market is on the verge of liberalisation. “This supply chain in Europe has evolved over the is a fact,” maintains Oesterle. “Whether we like past 60 years in a regulatory environment de- a selection of non-prescription medicines to be it or not, we have to adjust our approach.” signed to support pharmacies. “Despite a de- sold in supermarkets and other non-pharmacy Germany’s ban on pharmacy chains is hold- cade of warning signals,” he observes, “the sup- outlets is also touched upon by Dudley. These ing for now, but the general consensus among ply industry is only just waking up to the fact mass-market distribution channels are dominat- industry and pharmacists is that it is merely that consumers are increasingly deciding for ed by chains, often with aggressive pricing poli- a matter of time before German legislation is themselves where to shop, and that may in- cies and private-label offerings, he notes. changed. A survey conducted by Sempora Con- sulting in Germany in January and February of Within this context, branding will increas- are just some of the countries with a substantial this year involving 118 pharmacists, 108 con- ingly become an issue for retail pharmacies, he general-sale category, he says, and the Nether- believes. They will need to position their offer- lands is in the process of introducing its own cines, prescription-only drugs and diagnostic ing in a meaningful way for consumers, com- general-sale category. He also draws attention devices found that almost all manufacturers and peting both with other pharmacies and the in- to the emerging general-sale sector in Italy.
three-quarters of pharmacists believed phar- creasing number of non-pharmacy outlets allow- IMS Health’s Jürgen Petersen recently pro- vided an update on Italy’s ‘Bersani decree’ im- The survey revealed one in five pharmacists plemented in August 2006, which allowed all non-prescription medicines to be sold by gen- intended to sell their store if the ban on eral retailers, such as supermarkets, but with some restrictions (OTC bulletin, 31 July 2006,
page 1). Petersen said 85 mass-market outlets macy chains would be permitted in Germany becoming keener to encourage consumer choice offered non-prescription medicines as of March This article first appeared in OTC bulletin
within the next five years (OTC bulletin, 16
for economic reasons. After all, these same gov- 2007, compared with around 16,800 pharma- ernments want consumers to spend more of their cies. The 85 outlets were concentrated mainly Interestingly, the survey also revealed that own money on their own health,” he says.
in the north of the country, led by Coop with one in five pharmacists intended to sell their Switching lifestyle drugs from prescription 54 stores, and followed by Carrefour, Auchan The business newsletter for Europe’s consumer healthcare industry store if the ban on non-pharmacist ownership to non-prescription status will also give phar- macies a chance to differentiate themselves, be- Dudley maintains that the “retail pharmacy lieves Dudley, by providing specialist support ers, the time has come for pharmacies to “crys- concepts developed by DocMorris in Germany services. “Introducing lifestyle OTC medicines have the potential to revolutionise the develop- through switches over the next five years will ment of pharmacy chains across Europe”. present important opportunities for organised ■ For further information on ‘OTC distribution in Eur- pharmacies,” he says, highlighting GlaxoSmith- ope – the 2007 edition’ contact James Dudley Manage- when it started out as an online pharmacy tar- Kline Consumer Healthcare’s plans for a Euro- ment (Tel: +44 1562 747705; Fax: +44 1562 750275; geting German customers from a base in the pean switch of the weight-loss medicine orlis- E-mail: information@james-dudley.co.uk; Website: www.
Netherlands (OTC bulletin, 31 July 2000, page
tat (OTC bulletin, 27 February 2007, page 1).
www.otc-bulletin.com
28). The retailer reported a turnover of C172 Dudley also draws attention to the recent OTC bulletin 30 April 2007

Source: http://www.james-dudley.co.uk/img/press-release-images/may-2007.pdf

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