How Brazil’s pharmaceutical retail gets ready to face disruptions

Amazon announced that it volition merchantability medicine nether aesculapian medicine successful vending machines from December successful the United States. Buying aspirin and ibuprofen conscionable similar a snack successful 1 of these machines is not a caller happening for Americans. CVS has respective of these machines dispersed successful metro stations, parks, airports, and different places with dense radical transit. But successful Brazil, buying controlled substances with this level of convenience was unheard of. And the archetypal to instrumentality this measurement was not an established pharmacy but a marketplace that’s been operating for a small much than 5 years.

Amazon Pharmacy began successful 2018 with the acquisition of PillPack, a pioneering American healthtech which sold medicine medicine online. The concern grew during the pandemic with the aforesaid look that raised Amazon into large tech status: assertive discounts, and accelerated and escaped deliveries.

In 2022, the institution paid 3,5 cardinal dollars for One Medical, a superior aesculapian attraction web that operates remotely oregon successful person, and it volition beryllium successful their clinics that Amazon’s medicine vending machines volition beryllium installed.

Amazon Pharmacy’s numbers aren’t public, but an interior papers to which the website Business Insider had entree showed profits of 3 cardinal dollars successful 2024. Specialists person said that Amazon had the imaginable to go 1 of the USA’s biggest pharmacies, if they managed to support the accelerated enlargement gait agelong term. But the fig is inactive tiny compared to the yearly profits of CVS and Walgreens, which made, each, astir 100 cardinal dollars past year.

Meli's pharmacy successful Jabaquara: a doorway to a billionaire marketplace (Letícia Furlan/Exame)

A azygous 1 of these companies made much than 2 times each nett made by the full of Brazilian pharma retail successful 2024, erstwhile the fig surpassed 200 billion… reais. Frequently Brazil is successful archetypal spot connected lists of countries with the astir pharmacies: determination are 93.700 according to numbers surveyed by the IQVIA consultancy. Laws and sanitation norms successful Brazil inactive marque it truthful that medicine sales, either medicine oregon not, tin lone beryllium conducted done these establishments.

It is not a caller thing, however, for companies successful different sectors to effort and articulation this market. So far, Brazilian pharma retailers managed to support the assemblage “pure-blooded”. But they consciousness the disruption knocking connected their doors stronger than ever present and they are moving, beryllium it to support marketplace shares – beryllium it to simply halt caller players from joining.

History repeats itself

Mercado Livre is the largest e-commerce successful Latin America, and it besides works with medicine income successful immoderate acting countries. But dissimilar Amazon, which works with their ain stocks, Meli positions itself arsenic a income transmission for sellers successful its marketplace, which successful this lawsuit are pharmacies.

In the neighboring countries of Chile, Colombia and Argentina, the institution is already operating with implicit the antagonistic (OTC) medicine, which tin beryllium acquired without prescriptions. In Mexico, the institution is besides authorized to merchantability medicine medicine. But thing of the benignant was missing successful Brazil, its main market.

Mercado Livre's Fernando Yunes: the thought is to merchantability different pharmacies' stocks successful the platform, not owning our ain web (Leandro Fonseca /Exame)

Here, Meli can’t replicate their cognition successful the aforesaid way, due to the fact that of regulations. The crux of the occupation is simply a solution from the National Health Surveillance Agency (Anvisa), RDC 44. It prohibits the online merchantability of medications by pharmacies oregon drugstores not authorized and licensed by competent authorities. In short: the medicine cannot originate from a Mercado Livre organisation center.

“We are having talks with nationalist argumentation providers to update regulations and let america to run successful a marketplace model”, said Fernando Yunes, elder vice-president of Mercado Livre and liable for Brazilian operations, successful a caller property conference. Reached retired by EXAME, Anvisa has informed that “the process of revision of RDC 44 is inactive successful the workings”.

The solution Meli recovered to commencement exploring this marketplace was purchasing a pharmacy successful the confederate São Paulo city, frankincense acold owned by the healthtech Memed. In possession of a licensed establishment, unfastened to the nationalist and with standby specialists, Meli wants to aviator operations successful the state’s superior city. “It is so possible, particularly with our ain stocks. We volition present person each indispensable pharmaceutical license”, explains Adriana Cardinali, the company’s judicial director.

Ready for a counterattack

Despite the extended fig of pharmacies successful Brazil, the economical powerfulness of pharma retail is concentrated successful a prime radical of large networks. The associates of the Brazilian Association of Pharmacies (Abrafarma) moved implicit 103 cardinal reais past year, beauteous overmuch fractional the profits of the full sector, with little than 12.000 establishments.

Pague Menos' Carlos Fernandes: clients with chronic diseases spell to the pharmacy 4 times much often (Pague Menos/Divulgação)

“An Abrafarma store makes 10 cardinal reais a year, portion a emblematic pharmacy makes 700.000”, says Sérgio Mena Barreto, the association’s CEO. Even though the entity represents immoderate of the main absorption to the entranceway of Mercado Livre successful the segment, seeing verticalization risks, the enforcement says that pharma retail fears nary specified disruptions.

“New players volition find a assemblage successful which stores transformed themselves into tiny organisation centers to flooded inefficacies and person mobile strategy integration connected a wholly fluid carnal space”, says Mena. “We person a precocious level of predictability of accumulation and supply.”

To each their weapons

Panvel, from confederate Brazil, claims for itself a definite magnitude of pioneering successful online medicine income with accelerated deliveries, a practiced its had since earlier the pandemic. “We person ever understood this arsenic a competitory differential successful a satellite successful which the wont of online purchasing volition lone grow, and not get smaller, adjacent if wethink the relation of the carnal store volition stay beardown for a agelong time”, affirms Antônio Napp, the company’s CFO.

According to him, to play the “marketplace game” merchandise availability and proximity to the lawsuit is necessary. “If you’re not close, tools volition not place you arsenic a transportation player”, explains, citing examples specified arsenic iFood. “The inclination is for these platforms to turn with our networks, not independently from them.”

In Pague Menos, the strategy of focusing connected clients undergoing attraction for chronic diseases, specified arsenic diabetes and hypertension, helps to antagonistic the imaginable accomplishment of caller entrants, says Carlos Fernandes, vice president of operations astatine the company. “Clients with this illustration sojourn the pharmacy 4 times much frequently, and their mean summons is 60% higher,” helium explains. “It’s nary usage gathering an full ecosystem without archetypal knowing the patient’s journey.”

CVS vending machine: medicine escaped drugs successful a autobus terminal (Barry Chin/The Boston Globe/Getty Images)

The pharmaceutical retailer precocious took an antithetic measurement successful its quest for designation extracurricular of Northeast Brazil, its archetypal market. It was the archetypal to acceptable up a pharmacy wrong a euphony festival, The Town, to merchantability over-the-counter medications. It repeated this aforesaid strategy a fewer weeks agone astatine Tomorrowland. To bash so, it obtained impermanent authorizations from Anvisa.

Pague Menos has a three-story pharmacy successful Fortaleza, considered the largest successful Brazil. But that doesn't mean the institution is approaching the American pharmaceutical retail model. “The US exemplary is precise commercialized. We volition proceed selling goods, but seeking to get person and person to people. I spot the aboriginal of pharmaceutical retail going much towards service,” helium states. Today, successful summation to selling products, Brazilian pharmacies tin execute tests and administer vaccines. “But the regulatory world doesn't let america to spell overmuch further than that,” says Napp, from Panvel.

EXAME contacted RD Saúde, the largest pharmacy concatenation successful Brazil, to larn astir its strategies for protecting against disruptive movements, but the institution chose not to comment.

Smaller players, specified arsenic autarkic pharmacies with much constricted scope and income channels, are watching the imaginable accomplishment of caller entrants with a spot much caution, but without ceasing to judge successful the sector's strengths. “Around 55,000 micro and tiny pharmacies supply medications successful 93% of Brazilian municipalities,” says Rafael Espinhel, enforcement president of the Brazilian Association of Pharmaceutical Commerce (Abcfarma).

The enactment represents 14,000 companies with this profile. “Small, isolated establishments are much exposed to the risks of marketplace transformations and request much accordant enactment policies and method guidance. The situation is structural, but not insurmountable,” helium adds.

The manufacture is looking

Pharmaceutical manufacturers are becoming much flexible regarding the merchantability of medicines extracurricular of accepted pharmacies. “Back then, we were against selling medicines successful supermarkets without regulation,” recalls Nelson Mussolini, president of the Pharmaceutical Products Industry Union (Sindusfarma). This is an contented that has precocious successful an unprecedented mode successful Congress. For decades, supermarkets person tried to get support to merchantability over-the-counter medications connected their shelves. The measure precocious approved successful the Senate does not assistance this permission, but authorizes the merchantability of medicines wrong the establishments, provided they are successful abstracted structures and with a pharmacist present.

“Having their ain pharmacy, we spot nary problem. Brazil took a agelong clip to rise its sanitary regulations and, nether nary circumstances, did the manufacture advocator for lowering them,” says Mussolini. Regarding the merchantability of medicines successful marketplaces, helium says that, “if determination isn't a mode to dispense the merchandise rapidly and safely, the concern doesn't work.”

Small industries, which trust much connected carnal retail and vie for support abstraction successful ample pharmacies with better-known brands, would person an further showcase wrong a marketplace. Ronnie Motta, CEO of Natulab, a shaper of over-the-counter medications, recognizes the advantageous broadside of this convenience—as agelong arsenic it doesn't connote indiscriminate usage of the product. After all, this could beryllium a hazard to the estimation and beingness of the business. "Decentralization is positive, arsenic agelong arsenic it's ever accompanied by responsibility," concludes Motta.