France And Italy Next For Zur Rose As Sales Exceed $1bn For First Time
Executive Summary
France and Italy are next for ambitious European online pharmacy Zur Rose, which has posted annual turnover in excess of $1bn for the first time.
Swiss supply chain disruptor Zur Rose is pushing ahead with its goal of becoming the biggest pan-European e-commerce pharmacy, eying up expansion into France and Italy through its new Promofarma retail platform.
Speaking to HBW Insight as Zur Rose announced its financial results for the year ended 31 December 2018 – which saw group turnover grow by 22.8% to CHF1.21bn ($1.22bn) – chief executive officer Walter Oberhänsli confirmed that France and Italy would be the “initial focus” for the recently acquired Promofarma vehicle.
To Ban Or Not To Ban
German pharmacists' association, ABDA, is no longer calling for a ban on mail-order sales of prescription medicines, because it says there is “no longer any prospect” of implementing such a policy change within the current federal parliament.
The German Minister for Health, Jens Spahn, in December revealed that he was no longer pursuing a ban as it presented too many legal problems from a local and European point of view.
ADBA is now throwing its weight behind Spahn’s proposals to introduce e-prescriptions in Germany, pushing for pharmacists in the country to have a say in how these proposals are implemented.
This has led to an interesting situation, in which ABDA and Zur Rose – after being arch-enemies for the last few years – now agree on something, albeit for opposing reasons.
Oberhänsli has also been an enthusiastic supporter of e-prescriptions, arguing last year that their introduction in Germany would make it easier for patients to buy their OTC and prescription drugs online at the same time, making the mail-order channel more attractive.
Snapped up for an undisclosed sum in 2017, Spanish e-commerce platform Promofarma presented Zur Rose with an opportunity to use digitalization to realize its goal of becoming the biggest pan-European e-commerce pharmacy in a “much faster, much easier” way, Oberhänsli said in an interview last year. (Also see "Zur Rose’s European playpen" - HBW Insight, 19 Oct, 2018.)
Rather than having to establish a physical presence in a new country and deal with the complexities of national pharmacy regulations, Promofarma’s platform technology allowed Zur Rose to work with existing pharmacies in target markets, he explained, connecting them with consumers via the platform.
As to which of the two markets would be first to see the platform launch, Oberhänsli said that different “country-specific factors” would play a role in such a decision, with the firm currently examining these factors carefully.
While Oberhänsli couldn’t comment further on the details of the French and Italian Promofarma expansion, he revealed that the platform’s existing business in Southern Europe would also be “driven forward” in 2019.
Turning to Zur Rose’s 2018 financial performance, in its largest market, Germany, the firm reported OTC sales up by 79.3% to CHF369m, despite intensified price competition for OTC products.
This impressive growth was in part driven by Zur Rose’s acquisitions during 2018, which Oberhänsli claimed had made it “by far” the leading player in the German online OTC market. (Also see "Zur Rose swallows up another German rival" - HBW Insight, 2 Nov, 2018.)
While acquisitions and a reduced spend on marketing activities explained Zur Rose’s lower organic growth of 6.3% for the group, Oberhänsli said this figure was nevertheless in line with the firm’s strategy.
Prescription medicines contributed the rest of Zur Rose’s total German turnover for the year, which grew by 38.9% to CHF671m.
Meanwhile in Switzerland, Zur Rose’s retail business grew by 4.3% to CHF133m, with the firm attributing the rise to the opening of a third ‘shop-in-shop’ retail outlet in Zürich, in addition to the two already open in Bern and Basel.
For regulatory reasons, consumers in Switzerland are not able to buy OTC drugs directly from e-pharmacy. Zur Rose has, therefore, had to adopt a different approach to digital supply-chain disruption in the country.
In cantons where doctors aren’t allowed to supply drugs to their patients directly, Zur Rose has been pushing forward with its ‘omnichannel’ approach, which involves opening bricks-and-mortar stores within Migros-branded supermarkets and offering consumers the same prices on OTC and prescription drugs as it offers online in other countries, such as Germany.
The remainder of Zur Rose’s Swiss sales in 2018 came from supplying self-dispensing doctors in cantons where this was allowed. Turnover from these wholesale operations increased from 5.5% to CHF389m in the 12 months.