Change in the air: Shifts in retail pharmacy are likely to exert force for disruption and innovation
The last two years will likely go down as the two most tumultuous for retail pharmacy — certainly since the millennium. On the one hand, the industry is seeing some growth.
In August, ResearchAndMarkets.com released a report (“Pharmacies and Drug Stores Global Market Report 2021: COVID-19 Implications and Growth to 2030”) concluding that the global pharmacy and drug stores market is expected to see annual growth of about 6% between now and 2025. This will be partly due to an aging population providing a growing customer base for pharmacies and drug stores.
But at the same time, there are headwinds that will continue. The pandemic will continue to play a major role for pharmacies, but retailers will have to contend with consumer behavior and expectations; competition; labor shortages; inflation; and government regulations on the local and national level.
“Rapidly increasing cost pressures from regulatory agencies and payers will restrain the pharmacies and drug stores market,” according to the ResearchAndMarkets.com report. “Government budgetary pressures are leading to lower pharmacy compensation for most countries with public health care. The consolidation of pharmacy benefit management firms in the U.S. has worked similarly, driving lower costs and margins and shifting prescription volumes to delivery of direct or mail order.”
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These are issues to consider as we start a new year. No doubt change will be a big part of the strategy for retailers, and the changes will come in many forms. Deloitte said the role of the pharmacy and the pharmacist in the healthcare ecosystem is evolving as technologies — such as artificial intelligence and virtual health — drive exponential change. The company said many pharmacies operate on a legacy business model that is only just beginning to embrace technology and customer service innovation.
“Today’s retail pharmacists are highly trained, trusted medical professionals who spend a disproportionate amount of time counting pills and addressing clinical edits rather than operating at the top of their license (such as providing point-of-care testing and counseling),” Deloitte said. “Not only does this tend to minimize their ability to affect patient outcomes, but is also causing safety and profitability issues.”
The dynamic pace of today’s innovation cycles is likely to create disruption, not a gentle evolution, according to Deloitte. Things on the horizon, the company said, could be treatments that no longer focus on chemical and biologic solutions but instead focus on digital therapeutics; retail pharmacies that could become consolidated health destinations with product distribution altered by 3-D printing, kiosks, telehealth, and same-day delivery by driverless cars; or retailers could adopt automation and AI algorithms to enhance pharmacists’ responsibilities, allowing them to become recognized as care providers.
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Of course no one knows for sure if or when the industry will see such dramatic shifts. The other question retailers need to ponder is this: How quickly will these changes happen? By all accounts the industry is not short of ideas, but the biggest question that must be answered is which one of the headwinds is the priority. It’s something to think about for 2022 — and beyond.