The pharmacy industry is growing as Norwegians get older and sicker. The online actor Farmasiet is betting that we will also become more embarrassed.
GROWTH PLANS: The pharmacy has recently moved into a large, new warehouse. Further scaling will initially be about how many hours of the day the pharmacy works on packing and sending out goods, according to general manager Elisabeth Haug. Photo: Adrian NielsenPublished: Published:
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A row of cardboard boxes on a conveyor belt meets an intersection. The first two go straight ahead, the next to the right.
– It is because that order contains prescription drugs, explains Elisabeth Haug, general manager of Farmasiet.
The fully digital player has recently moved into new, far more automated premises in Vestby outside Oslo. The warehouse measures eight thousand square meters and currently handles 4-6,000 orders a day. Thus, you can say that it is the country’s largest pharmacy, says Haug.
– The capacity can be more than doubled, so now I don’t think we need to move for a while.
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Want tougher competition
Farmasiet is the country’s largest online pharmacy. The company was founded in 2014 and has had steady growth in recent years. In 2022, the turnover came to NOK 526 million.
However, the market shares are still modest. The pharmacy market as a whole has grown to approximately NOK 45 billion.
– There are many who have thought that online pharmacies are just nonsense, that it is not possible to operate responsibly. But now the big players have started to notice our growth, says Haug.
GROWTH AMBITIONS: The pharmacy had revenues of just over NOK 500 million last year. The pharmacy market is worth around 45 billion. – We will be quite satisfied with a 3-4 per cent market share, says Skaug. Photo: Adrian Nielsen
She is confident that it will not stop. She points to Sweden, where 20 percent of the pharmacy market comes from online shopping.
– There will be a greater force here at home. We do not understand why pharmacies should be the least mature industry of all Norwegian retail.
Much is probably about old habits, according to Haug. She likes to imagine tougher competition from the big pharmacy chains.
– It would have been good if they tried a little harder online. For now, we think it’s a bit easy to be the best at customer experience. But we know it won’t last forever.
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Disloyal customers
The pharmacy industry has experienced strong growth since the Pharmacy Act was liberalized in 2001. The number of new shops has continued well into the last decade, statistics from Virke show.
In the period 2011–2021, pharmacies are the clear winner in the list of industries with growth in the number of stores.
An aging population can be one driver, according to Virke. They also point to industry slippage. In other words, the pharmacies “steal” turnover from other industries by selling, for example, groceries, cosmetics and health food.
The pharmacy will also highlight marketing as a perspective.
– Because this is an industry that has not grown through online shopping, much has been about physical availability. When it comes to choosing a pharmacy, people are very unloyal. They go to the closest thing.
AUTOMATION: In the old warehouse, almost all processes were done manually. Pharmacists are still required to process prescription orders, but far more of the flow of goods now happens automatically. Photo: Adrian Nielsen
– Do you think there is a danger of over-establishment?
– Yes, of course I think so. If you look at Sweden, you don’t have several physical pharmacies on every street corner, as you can find here in Norway. And if you look at the margins, there is a fight for every penny. It is difficult to run a single pharmacy profitably in the long term.
Pharmacy 1: No over-establishment
However, over-establishment is not something Apotek 1 worries about. With 450 pharmacies spread across the country, and a total turnover of NOK 14.5 billion, they are by far the country’s largest player.
– We want to be present in areas with high traffic and increased turnover, just like the grocery chains. There are 5,000 people per pharmacy in Norway, which is significantly higher than other countries in Europe, writes press manager Silje Ensrud in an email to E24.
She says that demand has increased as a result of population growth, and that an increasingly large part of the population belongs to the older age groups.
– More and more medicines are being launched, and we are living longer than ever. The demand for medicines and advice on correct use increases in line with this.
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Focus on the “chronicler”
The pharmacy has burned through almost NOK 400 million before tax so far in the company’s lifetime. The 2023 accounts will also show a deficit, confirms Elisabeth Haug.
– Profitability is still a few years away. But it is getting closer and we are working hard for it. Because it is an important success criterion – to show that it is possible to do this profitably.
1 of 3 Photo: Adrian Nielsen
The key is volume. To continue growth, to sell more.
The focus going forward will be directed at the “chronicler”, says Haug.
– That is, the customers to whom we supply prescription drugs. They are the ones who are the most satisfied and who return most often. We will work to give them even more, including making advice more easily available.
There are also some growth opportunities, Farmasiet believes. Especially when it comes to “embarrassing” medicines.
– For example, there has been enormous growth in the sale of obesity medicine. It’s probably not everyone who wants to meet famous people at the pharmacy when they pick it up. Then we can offer discretion.
SEEKING TRUST: An important task for Farmasiet is to build credibility as a pharmacy, says Haug. – We focused a little too much on the e-commerce part at the start. Photo: Adrian Nielsen
ADHD medication is another product group with opportunities, she says.
– It has to do with shortages. It’s not so cool to visit three pharmacies only to find out that they are all sold out. With us, you can see if we have the goods in stock, or we will let you know when we receive them. It is these types of services that we will focus more on.
2023-11-12 18:03:39
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