Retail pharmacies are under considerable pressure. They are caught between increased competition, rising operating costs, sustainability concerns, and shifting customer preferences. Amazon’s entry into the market with the acquisition of PillPack and, more recently, with the rollout of Amazon Pharmacy have been game changers for the industry. Consequently, initiating new strategies, including packaging, will be pivotal for future success.
Increased Operating Costs
Operating costs for retail pharmacies have been steadily rising. Research reports the cost of dispensing medications at $12.40. Payroll costs were the biggest drivers of the overall cost, accounting for roughly 58% of dispensing costs. And that was before the tight labor market forced increases in pharmacy technicians’ wages. For example, at the beginning of 2022, Walmart announced they raised their hourly average wage to more than $20 per hour.
Consumers are Prioritizing Sustainability
Consumers are taking more actions to live and buy sustainability. To give an instance, in a survey of consumers over half of the respondents (53 percent) said they would use a brand or store less frequently if they discovered they were not operating sustainably, and 18 percent said they would stop shopping at that retailer altogether. As a result, retail pharmacies, like all retailers, are taking notice and pivoting to more sustainable business practices, including more green packaging.
Changing Customer Preferences Spurs Rise in ePharmacies
Even before the pandemic, consumers enjoyed the convenience of home delivery on everything from shoes to groceries. But COVID’s lockdowns and infection fears ushered in an unprecedented demand for non-contact delivery, particularly in drug stores. Since the onset of the pandemic, the adoption of ePharmacies has soared. And the trend does not seem to diminish even as COVID has waned.
ePharmacies meet consumers’ needs in various ways. For instance, purchasing medications online reduces the need for those with chronic illnesses to head to their local pharmacy. They also provide a method to deliver medicine to consumers in rural areas with limited retail options. Additionally, ePharmacies often offer discounted medications, aiding consumers in dealing with the high cost of prescription drugs.
The growth of ePharmacies is projected to continue. With telehealth visits increasing during the pandemic, consumers are now more comfortable accessing healthcare services online. Furthermore, with more and more individuals using mobile phones, online shopping will undoubtedly continue to grow. The Mobile Economy 2020 revealed that smartphone penetration was 65.0% in 2019 and is expected to reach 70.0% by 2025.
Maintenance Drugs are the Bulk of Prescriptions Filled
According to the Centers for Disease Control and Prevention (CDC), six in ten adults in the United States have a chronic disease. And four in ten suffer from two chronic illnesses. While there are a myriad of medicines available, maintenance drugs, such as those used to treat high blood pressure, heart disease, asthma, and diabetes, make up 90% of prescriptions filled in pharmacies.
Lack of Medication Adherence Costs Lives
Medication breakthroughs have been made in controlling many of these conditions. However, studies show that 20% to 30% of prescriptions are never filled. Plus, around 50% of drugs for chronic disease are not taken as prescribed. A landmark study published in the Annals of Internal Medicine revealed that this lack of medication adherence dramatically effects health. In the United States it causes nearly 125,000 deaths and 10% of hospitalizations and costs the US healthcare system up to $289 billion yearly.
The pandemic sparked a rise in ecommerce creating new business models for retail pharmacies. At the same time, medication adherence continues to vex the healthcare system. Solutions are now available to support the new business challenges retail pharmacies face while reducing costs and improving medication adherence.