Prescription delivery services on the rise after COVID-19
The Interview started with the expert outlining trends and themes in the D2C sector, and how this compares to Alto’s evolution. “Consumers continue to expect more, they continue to expect better and they want it faster,” the expert told Third Bridge Forum. He added that Amazon Prime has reshaped an entire consumer class and COVID-19 has accelerated that trend.
How much of the total market is addressable by D2C was also discussed, with the Interview revealing Alto’s estimations as USD 150-200bn — a number the company expects will rise to USD 350-400bn over the next decade.
Going into more detail about how the pandemic is affecting the industry, the specialist confirmed that volumes surged as people opted for delivery services. He expects 80-90% retention on patients acquired during this “gold rush”.
Another topic covered in the Interview was the role of telehealth in D2C pharmacy volumes. “While I view it as a halo effect on the underlying consumer preference shift, I don’t see telemedicine being the driving force,” the expert said, noting that many of the most lucrative prescriptions cannot be prescribed through this channel.
The competitive landscape was also discussed, with a focus on Amazon PillPack, Alto and NowRx. The expert shared his thoughts on each player in the context of three axes: people, process and technology.
The Interview also covered how large distributors such as McKesson, AmerisourceBergen and Cardinal will be affected if market share moves to a company such as Alto versus a traditional pharmacy. In this instance, pricing power would move to D2C pharmacies.
Another area of focus was the status quo with PBMs (pharmacy benefit managers). “I firmly believe that a lot of the PBMs will be out of business in the next 5-10 years,” the expert said. PBMs are “a big part of the reason why the cost in the space remains so high”.
One headwind is that Walgreens and the larger players have a structural advantage over the 340B Drug Pricing Programme. “I think the D2C pharmacies will have a very tough time competing for that revenue.” However, the specialist is still bullish on the D2C market overall.
To access all the human insights from Third Bridge Forum’s Prescription Delivery Services – PillPack, Alto & NowRx – Competitive Dynamics & Growth Outlook Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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