Segment Germany

Market environment Germany and EU

The ruling by the European Court of Justice (ECJ) on the legality of bonuses on prescription drugs by mail-order pharmacies from other EU Member States continued to be the key theme in the German pharmacy market. A reac­tionary ban on the mail-order sale of prescription drugs by the German Health Minister failed in the legislative period just ended as a result of resistance from a wide variety of stakeholder groups. A current report by the Federal Ministry for Economic Affairs and Energy confirms that deliveries by mail-order pharmacies are an efficient and com­plementary form of care provision for the population as a whole.

Market growth in Germany 1— Europe’s biggest drugs market, Germany, grew by around 5 percent to EUR 41.5 billion in 2017. The market share of the pharmacies amounts to 86 percent. The remaining 14 per cent of revenue is generated through hospitals and clinics. The mail-order share of the pharmacy channel amounts to 1 percent for prescription drugs, whereas it comes to 16.8 percent for non-prescription drugs. Pharmacy sales of prescription drugs rose by 5 percent to EUR 29.2 billion in 2017 and in the field of non-prescription pre­parations they rose by 2 percent to EUR 5 billion. Mail-order sales increased by 8 percent in 2017. The OTC segment accounts for a 73 percent market share – considerably more than the prescription drugs business. Growth at 10 percent in OTC mail-order sales is also significantly ahead of the growth rate for prescription drugs (+4 percent).

1 IQVIA™ market report on the development of the German pharmaceutical market in 2017


Repercussions of the ECJ ruling — As an immediate response to the de­cision by the European Court of Justice in October 2016 relating to bonuses on prescriptions for mail-order pharmacies from other EU Member States, the German Health Minister presented a draft bill for a law to ban the mail-order sales of prescription drugs. The aim of the law was to be “to guarantee the continuation of the existing comprehensive and uniform supply of drugs for the population, close to home.” However, it was not possible to pass the bill in the last legislative period of the German Bundestag, which ended in September 2017.

Several Federal ministries and political parties made public statements to the effect that an Rx-ban would be in breach of European law and the constitution. This also reflects the legal opinion of DocMorris.

In the 2017/2018 annual report of the German Council of Economic Experts for the German government, dated 21 November 2017, criticism is expressed that the restrictive handling of online pharmacies by means of occasionally inno­vation-stifling regulations on the demand side is preventing the spread of digitization.

A report published on 21 December 2017 on behalf of the Federal Ministry for Economic Affairs and Energy comes to the conclusion that “a ban on mail-order sales cannot be justified against the background of the comprehensive provision, as the mail-order business delivers drugs directly to the home.” According to the authors, the European mail-order trade “cannot be held responsible for the difficult situation of many pharmacies, purely in terms of time.” 

The coalition agreement between the CDU/CSU and SPD parties includes a passage to implement a ban on the mail-order sales of prescription drugs. It states: “In order to strengthen local pharmacies we support a ban on the mail-order sales of prescription drugs.”

Based on reports and statements by former German governments, DocMorris is still convinced that this plan is unconstitutional and incompatible with European law. DocMorris will therefore take all necessary legal and operational steps both in Germany and at the European level in the interest of its patients.

Telemedicine — In October 2017 the state medical council of Baden-Württemberg approved the Federal Republic’s first pilot project for the exclu­sively remote treatment of privately insured patients, to supplement the medical care of the population. This was followed in December by another pilot project for non-private patients. Both projects are based on the arrangement of the Medical Association in Baden-Württemberg, which is unique in Germany. Medical treatments can only be provided via communication networks and the doctor can make an individual diagnosis and initiate the treatment. However, prescriptions which are issued without prior direct contact between doctor and pharmacist may not so far be supplied by pharmacies, as a result of new regulations dating from November 2016. The state government has already indicated that it may be conceivable to dispense these prescriptions in the context of pilot projects.

Public consultation on health in the digital domestic market — In July 2017 the European Commission launched a public consultation about how digital innovations in the field of health and care are to be promoted for the benefit of the citizens and of the healthcare systems in Europe. The aim is the use of digital services for the promotion of citizen participation and integrated, person-centred care provision. The focus is on the shared use of data across borders by means of interoperable electronic health files, as well as the linking and sharing of data and specialist knowledge to improve prevention, personal health and care.

DocMorris business performance

DocMorris further extended its leading market position in Germany in 2017. Once again, the mail-order pharmacy grew considerably faster than the overall market in the area of non-prescription drugs, also making it one of Germany’s leading mail-order pharmacies for OTC drugs. Thanks to increased marketing activities aimed at patients with long-term illnesses and a regular need for prescription drugs, sales grew similarly well in the area of prescription medications.

Strong growth — DocMorris continued to grow strongly in 2017. At EUR 370 million, sales in local currency increased by around 19 percent year-on-year. The number of active customers continued to rise considerably year-on-year, climbing by 32 percent to 1.8 million in the reporting year. The number of orders placed by active customers in the last twelve months also showed a marked increase, growing by 26 percent in the reporting year, to more than 5 million orders. The average shopping basket fell slightly by 5 percent to EUR 68 in financial year 2017. One reason for this was stronger growth in the non-prescription drugs segment, in relation to the similarly positive trend in the area of prescription drugs.

Once again DocMorris grew considerably faster than the overall market in the area of non-prescription drugs, also making it one of Germany's leading mail-order pharmacies for OTC drugs. As a result of strong growth among new custo­mers, sales in this price-sensitive segment rose by 39 percent in local currency, to more than EUR 130 million. DocMorris also took first place once again in the Pharmacies category in this year’s survey by the German Institute for Service Quality. DocMorris impressed consumers in the areas of value for money, pro­duct range, customer service, online presence, shipping and returns, as well as ordering and payment terms. 

In the prescription drugs segment, sales in local currency increased by over 10 percent to around EUR 240 million. Intensified marketing activities aimed at patients with long-term illnesses and a regular need for prescription drugs, as well as the lifting of the bonus ban by the ruling of the European Court of Justice on 19 October 2016, all contributed to this positive development.

Telepharmacy — There is an increasing shortage of provision in rural regions. Entirely new and digital approaches are therefore needed, to offer people local solutions. The pilot project by DocMorris in Hüffenhardt shows what pharma­ceutical advice and provision might look like in rural regions.

DocMorris installed an automated drugs dispenser for prescription and non-prescription drugs in the context of acute care in the municipality of Hüffenhardt. The pharmaceutical staff advise the customer with the aid of a video terminal from DocMorris HQ in Heerlen in the Netherlands. Only when the consultation has been completed, can the customer order the non-prescription drugs or have his/her prescription dispensed after detailed pharmaceutical checking. The control and issue of drugs to the customers locally by means of the dispensing terminal is then also carried out by the pharmaceutical staff.

The video consultation facility with drugs dispensation was opened on 21 April 2017 but it had to be closed down again, at least for the time being. As a result of a judicial ruling, obtained by the pharmacists in a civil action at the local district court, DocMorris is temporarily unable to continue offering this service. DocMorris has, however, already filed an action with the administrative court in Karlsruhe.

Chronic Match App — In November 2017, DocMorris launched another digital service, the Chronic Match app. There are more than 20 million people who are chronically ill in Germany. Many are helped to cope better with their disease by contact with other affected people. The need for information, but also for the opportunity to share ideas, is great. People with chronic illnesses can use this self-help app to find someone for a personal one-to-one chat anywhere and for any indication. The app is a platform from which local self-help groups can also emerge, offering patients an opportunity to better cope with their everyday lives.

Nationwide German advertising campaign — In November 2017, DocMorris launched a multimedia campaign in Germany, repositioning DocMorris as a brand. The start of the campaign took the form of the societal question, “And how will we be tomorrow?”, which was played out over various outdoor advertising media and formats. The question is intended to prompt the observer to consider the theme of “tomorrow”, against the background of the advances resulting from digitization in all areas of business and life.

The DocMorris pharmacy considers it to be its task to answer this question in the health market as quickly as possible with digital progress for the benefit of the patient. So, the task is to show people how digitization in the healthcare system enriches their lives and – if they so wish – also makes it easier. For that reason, the main campaign is being launched in the first quarter of 2018, with TV commercials, online activities, advertisements and other measures in outdoor advertising. 

Cooperation with Eurapon — DocMorris has entered into a cooperation with pharmacist Kubilay Talu, the owner of Bremen-based Eurapon mail-order pharmacy. Kubilay Talu intends to collaborate closely with DocMorris in future, through Eurapon Pharmahandel GmbH. There are subsequent plans to operate the mail-order business from the Netherlands. This choice of location is an advanta­geous one in the European environment for an internationally active mail-order pharmacy. The Zur Rose Group took over Eurapon Pharmahandel GmbH at the end of 2017 and along with that a significant proportion of the logistics, as well as the drug deliveries for the Eurapon mail-order business. In 2016, Eurapon achieved sales amounting to EUR 52 million from its mail-order business geared towards non-prescription drugs and has grown by 30 percent per year for the last three years, which is considerably above the market average.

Takeover of Vitalsana — At the end of 2017, the Zur Rose Group took over the mail-order pharmacy Vitalsana B.V. in Heerlen, as well as the associated service provider ApDG GmbH in Ulm, from Ströer SE & Co. KGaA. In the context of this acquisition, it is pooling a significant proportion of its mail-order business in the Aachen/Heerlen euro-region and achieving synergy effects along the entire value chain. With its mail-order pharmacy primarily geared towards non-prescription drugs, Vitalsana generated revenue of EUR 30 million in 2016.

Zur Rose Pharma business performance

Zur Rose Pharma, in Halle an der Saale, has increasingly become a compe­tence centre for marketing and services in the healthcare sector in recent years. In 2017 it continued to focus its services on the owner-run Zur Rose pharmacy. Sales remained stable year-on-year.  

In order to develop and exploit the potential of Zur Rose Pharma as a compe­tence centre for marketing and services even better, the decision was taken by the Zur Rose Group at the end of 2017 to position Zur Rose Pharma entirely as a healthcare service provider for the companies of the Zur Rose Group. The realignment is linked to the plans of Ulrich Nachtsheim, owner of the Zur Rose pharmacy in Halle, to step down for reasons of age and withdraw from the mail-order business. A succession solution has been proposed with the intention of serving the mail-order customers from mid-2018 from a newly established mail-order pharmacy in the Netherlands, which is a subsidiary of the Zur Rose Group, should they so wish.

40 employees will be affected by the discontinuation of logistics services and administrative tasks for the Zur Rose pharmacy in Halle. A wide range of measures over and beyond a redundancy scheme will be set up for them, to proactively assist them in their search for further employment. Zur Rose Pharma still employs around 90 people in Halle and intends to further expand the location for services in future.