“E-pharmacy,” also called “internet pharmacy” (网上药店) is an online platform acting as an intermediary or retailer to facilitate the sales of medicine, and it is becoming increasingly popular across the world. China, as a fast developing country, is facing the same regulatory and security challenges with their e-pharmacy as many developed countries. The global challenge is applied at a larger scale in China; according to China’s Ministry of Commerce, “China is one of the fastest-growing markets for pharmaceutical products, and the retail sale of drugs was USD 42 billion in 2013.” This represents an annual growth rate of 12% in the most populous country in the world. This means that in very few years, China’s e-pharmacy market will be one of the most important in the world.
Today, the largest Chinese cities are measuring a massive increase in demand for health care, averaging roughly 30% every year. There are 618 million Internet users in China, with 350 million Chinese expected to regularly purchase online through platforms such as T-mall and Jing Dong, and those numbers will continue to rise in coming years. As a result, the blending of two major trends in China, health care and e-commerce, is powering the development of the e-pharmacy alternative at a tremendous pace. China will became the world’s second largest pharmaceutical market in less than five years, and there are already close to 180 websites approved to sell over-the-counter (OTC) medicines online in China.
Succeeding in e-pharmacy in China: Practicality over Risk
One of the reasons for the success of e-pharmacy in China comes from the fact that most of Chinese are trending towards a busy lifestyle enforced by short holidays, as well as dynamic and competitive work environments associated with long hours. This results in high levels of stress and pressure in the population and is fuelling the demand for consumer health products, particularly vitamins and dietary supplements (VDS). The average consumer’s purchasing power is rising quickly in China so people are able to purchase healthier products to boost their immune systems, delay ageing and fight fatigue. The lack of free time leads the Chinese to value the convenient round-the-clock shopping and fast home delivery service embodied by an e-pharmacy. People don’t find the time to engage with the overloaded health system and usually find doctors too expensive. Self-medication and following traditional remedies is very common since health care in China hasn’t developed as quickly as other aspects of the country. E-pharmacy corresponds perfectly with the current Chinese lifestyle and desire for rapid product delivery.
E-pharmacy platforms show that herbal and natural ingredients are the most popular medicines. The general Chinese opinion concerning non-herbal and non-natural medicines such as prescription drugs is comparatively low, as they believe these medicines to cause unwanted side-effects and be less safe. Thus, OTC products intended for fighting allergies, colds and coughs have seen a strong growth last year, along with dermatological creams in mid China with e-pharmacies. Skin products are getting sold faster than other OTC products in China because the highly polluted and often humid air is particularly damaging to skin. Also, dermatological products don’t seem nearly as dangerous as ingested medicines when it comes to the use of toxic substances.
This e-pharmacy phenomenon is mainly powered by the newest generation. Consumer reviews, ratings websites, discussion boards, blogs, and other social media are used intensively by younger consumers. Firms wanting to sell their medicinal products through an e-pharmacy in China must ensure they have a real online presence and a capacity to handle their e-reputation. E-pharmacy user purchases depend on the opinions of internet influencers and on customer experiences.
Rogue China e-pharmacy omnipresence
The rise of e-pharmacy has been accompanied by the proliferation of illegal sales as well, but the situation has been pushed to an extreme. In China, according to Legit Script, only 3% of e-pharmacy websites comply with local laws and regulations referred to in Chinese as “非法.” This means that 97% of e-pharmacy in China are operating illegally and most likely unsafely. Rogue e-pharmacy has become a genuine problem in China as those websites aren’t managed by qualified pharmacies or pharmacists, don’t require prescriptions nor medical examinations and sell unapproved and falsified drugs. The public health of citizens is directly threatened by this high ratio of counterfeit medicines. In order to fight the proliferation of such websites, agencies such as the Chinese Food and Drug Administration are building a drug database for public awareness. Ideally, the Chinese government will also be scheduling annual crackdown campaigns to keep non-compliant websites to minimum levels. Furthermore, packaging will be improved, including clear colour codes which let patients to know if their medicine requires a medical consultation and prescription.
New perspectives on diversification of e-pharmacy in China
The leading consumer health players haven’t missed out on the e-commerce and e-retailing trend in China. Chinese pharmacies and international players have started selling online though the most popular e-commerce Chinese website. For example, Guangzhou based health giant By-Health recently opened its flagship store on TMall. The new channel of e-pharmacy is letting large firms reach far more patients. As online reputation is of paramount importance in e-pharmacy, direct selling companies are offering consumer experience centres to review products. In this way, customer needs are targeted far more effectively, products can be segmented and internet image better regulated. “Amway” and “Infinitus,” for example, both have interesting strategies to be studied. An e-pharmacy should also look into how to advertise in China, as mobile advertising may be the solution to boost sales in China, since mobile internet-based formats are skyrocketing at a yearly rate of 600.0%.
Most importantly, however, is the fact that China could legalise the selling of prescription drugs online as soon as this year. If that is the case, then it will become paramount for pharmaceutical companies to step up their presence online, and even more important that measures be put in place to stop what will no doubt become a thriving counterfeit trade.
ASOP Final Report : Chinese Internet Pharmacy Market. Feb 2015
Daxue Consulting research
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