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Source: Times Finance Author: Li Aohua

The online drug purchase and medical insurance personal account payment service has officially achieved full coverage in Beijing, Shanghai, Guangzhou and Shenzhen.

Shenzhen Medical Insurance Bureau announced on August 1 that it has officially launched the online medical insurance personal account drug purchase service, where consumers can order drugs online, pay with their medical insurance personal account, and enjoy home delivery of drugs. Currently, the service has covered more than 400 pharmacies in Shenzhen.

On the previous day, on July 31, Guangzhou City also officially launched the online medical insurance personal account payment service for purchasing over-the-counter drugs. The first batch of 24 designated medical insurance retail pharmacies have now been fully connected to the online medical insurance payment system. Insured people can use their personal medical insurance accounts to pay and settle when purchasing over-the-counter drugs online.

Times FinanceMeituanAs for medicine purchase, as of now, in addition to the above-mentioned cities, Meituan has launched online medical insurance medicine purchase services in Qingdao, Shangrao, Dongguan and other cities, covering Guoda Pharmacy, Yifeng Pharmacy, Neptune Star Health Pharmacy,First Medical, Dingdang Express Pharmacy, Gaoji Health and dozens of other chain brands.

The sales channels of the pharmaceutical retail industry are becoming increasingly diversified, and there is no absolute superiority or inferiority relationship between these channels, because different channels have different effects and advantages under different market conditions and for different consumer groups or product categories. Pharmaceutical O2O is a new retail model that combines traditional offline store drug purchases with Internet platforms, and physical pharmacies are still the main sales service providers.

A senior industry insider pointed out to Times Finance that the integrated development of online and offline pharmaceutical retail is a trend, but at the current stage, due to realistic factors such as the medical insurance coordination system not yet fully open, the prescription drug circulation mechanism not yet smooth, and the insufficient level of intelligent supervision, it carries more symbolic significance, indicating the future development direction, while its actual effectiveness has yet to be further released and improved.

Retail market growth slows down

According to the data from the State Food and Drug Administration, by the end of 2023, the number of pharmacies in China will exceed 660,000, including about 385,600 retail chain stores and 281,400 stand-alone pharmacies. However, at the same time, the growth rate of the pharmaceutical retail market has slowed down significantly, and the market has entered an era of stock competition.

According to Zhongkang CMH data, in 2023,Chinese MedicineThe scale of drug sales in the retail market reached 501.5 billion yuan, a year-on-year increase of 3.3%, and the growth rate slowed down significantly. In 2022, the scale of drug sales in the pharmaceutical retail market was 485.7 billion yuan, a year-on-year increase of 12.7%.

Shao Qing, founder of Yao Fu Neng, told Times Finance that the current O2O pharmaceutical market size does not account for a very high proportion of the overall sales of physical pharmacies, but the trend of customer flow shifting online is quite obvious.

According to Zhongkang CMH data, in 2023, O2O drug sales accounted for 4.0% of the scale of physical drug stores, an increase of 0.6% year-on-year. However, in terms of growth rate, in 2023, the scale of drug sales in physical drug stores (including O2O) increased by only 1% year-on-year, while the O2O drug market grew by as much as 19.4% year-on-year. In the sales of physical drug stores, the importance of O2O channels has increased significantly.

Before Guangzhou and Shenzhen announced the opening of online drug purchases with medical insurance accounts, Shanghai and Beijing had already launched this service in November 2023 and May 2024, respectively. Shao Qing told Times Finance that based on the experience of Beijing and Shanghai, after connecting to medical insurance account payment, the number of consumers who choose to place orders online has increased significantly. "Beijing and Shanghai now have more than 10,000 orders for online drug purchases with medical insurance accounts every day, which is roughly equivalent to the sales of 300 stores," said Shao Qing.

The data obtained by Times Finance from Meituan Medicine also shows that in 2023, the growth rate of Meituan Medicine's local instant retail transactions in Shenzhen will increase by more than 50% year-on-year, and the trend of online medicine purchases by users in Shenzhen will accelerate. The person in charge of Meituan Medicine revealed to Times Finance that Meituan Medicine began service testing at the end of July this year. On the first day of the test, the search volume of Shenzhen medical insurance keywords increased by more than 3 times month-on-month, and during the test period, it received a lot of feedback from users on expanding coverage.

The era of price comparison is coming

After the online medical insurance personal account drug purchase service is launched, there may be a new round of adjustments in drug sales prices, and the impact may even be transmitted to upstream pharmaceutical companies.

Times Finance recently visited a number of physical pharmacies in Guangzhou and compared commonly used antihypertensive drugs, hypoglycemic drugs and uric acid-lowering drugs. It was found that there is still a significant price difference between the prices of the same drugs on O2O platforms such as Meituan and the prices in offline physical pharmacies.

byPfizerTake the amlodipine besylate tablets (trade name: Norvasc) for example, the online price is about 80-100 yuan per box (5mg*28 tablets), but the price in many offline pharmacies is over 100 yuan. The price advantage of B2C e-commerce is even more obvious. The same specification of Norvasc is sold at a price of no more than 80 yuan in online pharmacies.

Shao Qing told Times Finance: "Online consumers are more inclined to choose branded drugs, while offline drug purchases are influenced by the shopping guides in drugstores. Consumers may choose to buy some high-gross-margin products or accept bundled products. After the online medical insurance individual account drug purchase is opened, it may force drugstores to adjust offline prices. Drugstores and pharmaceutical companies need to adjust their existing sales strategies to adapt to new changes. Now many branded drug companies choose to customize products exclusively for online, because the online circulation speed is faster, so companies can adopt more aggressive market strategies and occupy the market with cheaper prices."

Since the beginning of this year, the "price comparison" of drugs between different channels has become an important social topic. Medical insurance bureaus in Shenzhen, Guangdong, Dalian, Liaoning, Xuzhou, Jiangsu, Jingzhou, Hubei, Shaanxi, Inner Mongolia and other places have successively launched drug price comparison systems, through which the sales price of a drug in various medical institutions in the region can be queried.

In June 2024, Cailian reported that the National Healthcare Security Administration issued a letter on launching a special campaign of "going online to check drug prices, comparing data, and implementing governance". The letter pointed out that it is necessary to use the "instant delivery price" of online drug sales platforms as an anchor point, compare the prices of drugs in various channels such as the provincial centralized procurement platform, the prices of drugs selected in centralized volume procurement, and the prices of drugs in designated retail pharmacies with the "instant delivery price" of online drug sales platforms, and urge pharmaceutical companies to take the initiative to adjust if abnormally high prices are found.

Isshindo(002727.SZ) stated in the minutes of the investor research meeting disclosed in July this year that regarding price management and gross profit margins, online price differences are more due to subsidies, periodic promotional activities, etc., and there are differences in online and offline prices for the same product in the same store, which poses a risk of complaints. There will be price comparisons under sufficient market competition. The company will actively embrace the price comparison policies introduced by regulatory agencies, and then launch high-quality products with more market competitiveness. The price comparisons inside and outside the hospital have different variety structures, and are more based on price comparisons of basic drug varieties. When the company applies for store coordination qualifications in 2023, it will implement the policy of the lower of the winning bid price and the purchase price, and adjust the prices of the varieties in the coordinated catalog.

Shao Qing told Times Finance that online drug purchases are more convenient and cheaper for consumers. After the access to individual medical insurance accounts, the last "moat" of physical drug stores is gone, and it is inevitable that consumers will choose to shift to online channels. "If they want to keep consumers offline, drug stores can only improve their service quality, such as providing professional services such as pharmaceutical services and chronic disease management, to increase consumers' experience and differentiate themselves from online ones," said Shao Qing.