LillyDirect — Did the announcement just open the floodgates for Pharma’s foray into e-commerce?
Consumer healthcare, medtech and pharma companies are increasingly exploring opportunities to sell their products directly to patients through e-commerce channels. With the rise of telehealth and shifting consumer preferences, an owned e-commerce presence represents a major growth opportunity for brands.
Numerous major pharma and medtech players have explored this topic, including Pfizer, Johnson & Johnson, AstraZeneca, Exact Sciences, etc. Most are actively considering or have previously experimented with some form of direct-to-consumer (DTC) e-commerce, often referred to as “brand direct.”
The primary driver behind these DTC e-commerce initiatives is establishing direct relationships with patients. This allows brands to better understand patient preferences and behavior while owning the path-to-purchase. Additional benefits include:
· 2X higher consumer engagement when e-commerce is integrated with brand sites
· Increased patient awareness and advocacy, leading to better grant of patient requests by their physicians
· Best-in-class conversion rates around 5% with efficient customer acquisition costs
· Enhanced data and attribution capabilities
On the operations side, owning the e-commerce channel provides greater control over prescription fulfillment and support services. For example, brands can support patients to request prescriptions be sent to preferred specialty pharmacy and patient support hub. This avoids issues with independent pharmacies failing to appropriately handle insurance, copays or prior authorizations.
There are challenges associated with DTC e-commerce for pharma brands:
· Perceptions of steering patients away from healthcare providers
· Compliance considerations in directing prescriptions
· High costs to attract and convert consumers
Mitigation strategies include positioning it as an extra “choice” for patients, allowing providers to offer the e-commerce pharmacy as an option, and contracting telehealth partners upfront to avoid conflicts of interest.
It’s also essential that brands build competencies in areas like media, content, funnel optimization and cart abandonment to make these channels financially viable. Without expertise in digital consumer engagement, customer acquisition costs can quickly make DTC e-commerce untenable. This likely explains why some brands have abandoned efforts after lackluster results.
Then why isn’t every brand doing this already? Smiledirectclub shutdown and dollarshaveclub was sold off to a PE firm and are recent examples to make one pause. It all comes down to the customer acquisition cost economics. Consumer familiarity with products can be an important predictor of success. Extending a recognized brand like Viagra or Zepbound through DTC e-commerce makes intuitive sense. Having a basket of products to amortize CAC can also help, like it does for Hims&Hers. Alternatively, a novel value proportion of product plus channel can also be an amplifier — for example better patient outcomes when product is dispensed via e-comm vs. standard-of-care.
As telehealth and consumerism continue reshaping healthcare, large pharma brands would be wise to continue exploring DTC e-commerce. With the right strategies and execution, it can transform patient relationships, advocacy, and data while opening a new high-margin direct sales channel. However, it requires investment in digital consumer expertise and mitigating potential compliance risks.
#LillyDirect #ecommerce #digitalfrontdoor #pharma
References: https://www.today.com/video/eli-lilly-launches-program-to-make-obesity-drugs-more-accessible-201337413991, https://keyreply.com/blog/digital-front-door-strategy/
