Frankfurt Shortly before Christmas, the shares of Shop Apotheke Europe plummeted: The announcement by the Federal Ministry of Health (BMG) that the introduction of the electronic prescription planned for the beginning of 2022 was to be postponed indefinitely, caused the stocks of the Dutch pharmaceutical company to fall by almost 13 percent. The larger Swiss competitor Zur Rose, to which the Doc Morris mail-order pharmacy belongs, also fell sharply on the stock exchange.
The introduction of the electronic prescription is seen as a growth accelerator for online pharmacies. But this is now shifting because the necessary technical systems are not yet widely available.
Stefan Feltens, CEO of Shop Apotheke, is calm in an interview with Handelsblatt: “In its first statements on the e-prescription, the BMG underlined the importance of the e-prescription for the digitization of the German health care system. That makes us confident, ”he says. In any case, a gradual increase in e-prescriptions was assumed in the first few months of 2022 and a significant increase was only expected from mid-2022, according to Feltens.
The e-prescription will come, just later, according to the industry’s expectation: the postponement will fundamentally not change anything in the ambitious growth plans of Shop Apotheke.
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After the company, founded in 2001, took 20 years to reach the sales mark of one billion euros, Feltens plans to “not take five years” to reach the next billion in sales. Exact forecasts for the year 2022 are still pending, but the CEO is already promising: “We will return to the usual growth path next year.”
Pandemic as a growth driver
The “usual growth path” has been double-digit annual growth rates in recent years: Since the IPO in 2016, Shop Apotheke has increased sales sixfold from 177 million euros at the time to more than one billion euros in 2021, as the company did in mid-December reported.
Acquisitions at home and abroad and the trend from stationary to online trading fed the success; The corona pandemic also made a significant contribution: while the company had around 4.7 million active customers at the end of 2019, it was 7.3 million at the end of September 2021.
“The pandemic effect was particularly significant in 2020. The pandemic has greatly accelerated the change from stationary to online pharmacies, ”says Feltens. However, he is convinced that the company would have won a large part of the customers it won in the pandemic anyway.
Despite this positive trend, Shop Apotheke did not go as well as planned at the beginning of the year in 2021: On the one hand, the company was unable to recruit enough employees for the new logistics center in Sevenum near Venlo in the Netherlands to process customer orders for many weeks.
On the other hand, the EU Commission had stopped the infringement proceedings against Germany because of the ban on bonuses on prescriptions. This means that foreign mail-order pharmacies are no longer allowed to give their mostly German customers a bonus on prescription drugs. At Shop Apotheke, this led to a drop in sales of almost 31 percent to around 110 million euros for prescription drugs in the first nine months.
Because of these two effects, sales growth in 2021, at an expected ten percent, will be significantly lower than in previous years.
This is what the expansion plans look like
With a series of strategic steps, Feltens now wants to drive the company’s expansion further. On the one hand, as with competitor Doc Morris, the so-called “same day delivery” service is being expanded – the delivery of the drugs on the day they are ordered. “We are currently present with this service in 13 German metropolitan regions and want to further strengthen the offer next year,” says Feltens. Shop Apotheke works with a limited number of pharmacies in each region.
In addition, the company wants to offer additional services for chronically ill patients, which account for the majority of orders for prescription drugs. At the beginning of 2021, Shop Apotheke bought the Munich start-up Smart Patient, which among other things offers digital medication management.
In addition, Shop Apotheke launched an online marketplace in mid-December where third-party providers can offer health-related products. The model is also to be offered in other European markets in which Shop Apotheke is active.
Rapid growth abroad
These foreign markets also play an important role in growth: Outside of Germany, Shop Apotheke is active in six other markets that, according to Feltens, are growing very quickly. “In many countries, buying medicines online is not yet that widespread, but this is changing increasingly. That alone will grow our business. And of course we aim to grow not only with the market, but faster than the market, ”says the CEO.
Feltens can also continue to envision acquisitions: There are three types of transactions that could be interesting: a German competitor that is available at an attractive price, a small or medium-sized company that is expanding its presence in a foreign market can, and thirdly, especially digital champions who have skills that drive the business forward.
And finally one day the e-prescription should come from the consulting firm like Dr. Kaschke and partners expect that the share of online mail-order companies in the last 40 billion euro market for prescription drugs will grow from below one percent to ten percent.
Because of the investments in the various growth activities, the profit at Shop Apotheke is still missing. In 2021 the company expects a negative Ebitda of around minus ten million euros. There is still no forecast for 2022: The focus in the new year is on growth and market share acquisition. “In doing so, we will certainly not lose sight of our result,” the company says. In the long term, Shop Apotheke plans to achieve an operating result of six percent and more.
More: Mail order pharmacies with sales growth in the pandemic