Pharmacy2U: UK Online Pharmacy Business Analysis Report

This report provides a comprehensive analysis of Pharmacy2U, a UK-based online pharmacy, focusing on its business model, competitive advantages, and growth strategies. It delves into the nature of entrepreneurs in the pharmacy business and the start-up process. The report explores the sources of competitive advantage, such as innovation and cost-effectiveness, while also addressing the challenges related to data privacy and adapting to digital marketing. It examines the competitive environment, the company's growth and development, and the challenges of managing the business, including adapting to digitalization and increasing costs. The report also outlines the current growth strategies of SMEs and beneficial government support measures. Finally, it offers recommendations for Pharmacy2U to navigate the evolving pharmaceutical market and maintain its competitive edge. The report emphasizes the importance of adapting to changing market dynamics and maintaining customer trust.

Managing small and medium
sized enterprises

Table of Contents
INTRODUCTION...........................................................................................................................3
FINDINGS.......................................................................................................................................3
Nature of the entrepreneurs in Pharmacy business......................................................................3
Start-up process of pharmacy business........................................................................................4
Sources of competitive advantage for Pharmacy2U....................................................................4
Competitive environment of Pharmacy2U business....................................................................4
Growth and Development of the Pharmacy2U............................................................................5
Challenges of managing and running the business......................................................................5
SMEs current growth and development strategy.........................................................................6
Government support measures that are beneficial for the SMEs................................................6
CONCLUSION................................................................................................................................7
Recommendations............................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Expansion is the best strategy which helps the business in achieving their goals and
objectives and it is also helpful for the development of business to the next level. If a company
wants to improve their sales and market demand then expanding the business via entering new
markets is the suitable strategy. So, in this context, the report will cover the existing SME
company namely Pharmacy2U. This is a medium size online pharmacy company located in UK
which provides all medicine to their customers via online. The company have around 200
employees in their various stores where the stock of the medicine is getting placed and stored.
The key challenges the company faces are the compliance issues in which it is believed by the
public that its main purpose is to find new diseases to increase their existing pharmaceutical
drugs. The company is currently using digital marketing strategy via the idea of online
prescription transfers. Because of the increase in market competition the company face the
challenge whether they are able to exist in the market or not (Priadana and et.al., 2021).
The company also get fined by the commissioner that they are selling names and address of
patients without their permission. Such a mistake by the company put negative impact on the
business because they will start facing loss of their customer’s trust. So, this report will
recommend the strategy and solutions they can adopt in order to develop their business. The
report will further conclude the nature of the pharmacy company and start-up process of the
medium size Pharmacy2U company. The report will also discuss the sources of competitive
advantage available to the company that need to address by them. This will also state the growth
and development of the business till now.
FINDINGS
Nature of the entrepreneurs in Pharmacy business
The entrepreneur are the one who undertakes the risk to gain huge profits by satisfying
those needs and wants of the market which is yet to be satisfied. They are those individuals who
come up with the new and innovative products and services in the market by venturing their
ideas into a venture which can be small or medium size both. Pharmapreneurs are the one that
help different patients in curing their diseases with their unique experiences. Nowadays, local
public such as middle-class people and poor people go directly to the pharmacy stores rather than
hospitals in order to cure their diseases. Same the case with the Pharmacy2U where they sell

their products to the patients via online by taking all their prescription. The company
entrepreneurs provide fast delivery to their local and international customers via online channels.
With their new skills set in the retail sectors the entrepreneurs of the company reaches to the
more customers and adapt the changes without any doctorate degree. Their whole work is
depending upon their own experience that’s why patients of the UK believe more on them rather
than doctors (Melushova and Vivdenko, 2017).
Start-up process of pharmacy business
To start the pharmacy business the entrepreneurs, need to first analyse and understand the
demand of the business in the market and that need to consider what it actually holds along with
right structure. After that they have to identify and study the rules and regulation set by the
government for the pharmacy industry. They also need to study the production details of the
pharmacy including all the marketing and distribution related information. They need to adopt
various strategies in order to grow and develop the business as adopted by the Pharmacy2u. They
basically use digital marketing to reach to large number of patients. Then data collection has
been performed to define the concept in terms of practicality in real world sense. Finding out
related problems and their existing solutions. Evaluation of how possible it is to combine
tentative solutions that has been reached by an entrepreneur with the existing solutions in order
to modify the already existing products. Then entrepreneur undertakes to critically evaluate the
solutions in terms of its reliability, viability and validity by conducting feasibility study. And at
last, the solutions are practically implemented through the establishment of new venture that is
SMEs. In this way SMEs came into existence.
Sources of competitive advantage for Pharmacy2U
The sources of competitive advantage available to the company includes innovation, cost
advantage and brand quality. The company via online channel helps their patients to get all the
medicines they want by just seating at their home. The company uses the innovation very smartly
with the help of which now they are UK’s largest online pharmacy company. Not only that they
also provide the medicine to the patients at low cost than their rivals. The process of
manufacturing the product of the company is quite innovative and unique that the customers

believe their products prescription a lot. But because of the personal data selling by the company
this competitive advantage gets vanished for some period. Because customers get afraid and also
aggressive about how a company can sell their personal data. For this the company owner
apologies with the public and make promise about not to repeat the same (Hermina and Saudi,
2020).
Competitive environment of Pharmacy2U business
The demand of the pharmaceutical business is depending upon the Porter five forces
factor in which competition of the medicine product is one factor. The porter five forces factor
such as competition, threat of new entrants, power of supplier, power of customer and threat of
substitute product which affect the competition of the Medical SME businesses. If a same
product is having different price either locally or internationally the customers and distributors
go with the low price only. And the price of the product depends upon their production cost and
marketing and distribution cost. But the most important thing about the competitive environment
of the pharmacy company is that its demand has increases day by day. The annual turnover of the
pharmacy company in UK was over 42 billion in the year 2020. The expected annual growth of
the pharmacy industry is 14% per annum from 2019 to 2025. This indicate that the competitive
environment of the pharmacy company is quite high and for this Pharmacy2U need to adopt the
best pricing strategy in order to take competitive environment (Krylova and et.al., 2020). The
main competitors of the Pharmacy2U are Injured Worker Pharmacy, NHS, Blink Health and
Edrugstore.
Growth and Development of the Pharmacy2U
The online Pharmacy2U reported 41% of increase in revenue in the fiscal year 2019 even
in the covid-19 situation. The company is adapting the changes in such a way that the customers
will remain with the company only. The net assets of the company are 17.2 million pound as on
march 2019. The company make increment in their number of NHS patients by registration of
around 21%. Pharmacy2U company currently uses the product line expansion growth model to
launch various benefitable medicines for their UK based customers. The company is growing
rapidly because of their online service. The patients of the company are getting all the products
at their doorstep that’s why they don’t want to move to any other company for the same

products. The company also raised 40 million of capital growth by gaining higher shares of NHS
repeat prescription. The development of the company till now is better but they also need to
make strong relation with customers in order to further grow the business (Sriviboon, 2020).
Challenges of managing and running the business
The challenges the company in managing and running the business Pharmacy are as under:
a) Adapting to digitalisation: Earlier, the pharmacy business used to run from shops and
centres near hospitals, people used to buy medicines from stores near their residence as
per convenience. But with advent of IT and online forum, pharmacy companies have to
move to launch their own website and sell medicines online with delivery services. Some
companies use their own delivery service while others use the help of other services of
logistics. Pharmacy2U also has to maintain own website and sell medicines, with giving
offers and discounts on purchases consecutively (Bader and et.al., 2017). This requires
budget from the company and increases the operational costs while capturing online
market.
b) Few leads from health care providers: The rise of Covid saw fall in employment and thus
access of employees to health care services of medical insurance got reduced. This had a
major impact on pharmacy services such as Pharmacy2U. The rising operational costs
thus moves to patients, which causes many for opting out of routine and going for local
pharmacies.
c) Increasing DIR fees and decrease in reimbursement: In 2019, 18% of medicare part D
rebates in 2019 were made up of pharmacy DIR fees. It has been the biggest challenge
for business of pharmacies in 2020. Increased fees has contributed to reimbursement
decline, and low cost prescription rates have led many independently operating
pharmacies close down.
SMEs current growth and development strategy
SMEs generally have limited capital to operate, they use the equity and debt combination for
pooling in capital. For keeping its operations going on, the company takes debt in the form of
overdraft or credit limit from banks. The banks see the business model and then finance the

operations of the company. This helps in growth of SMEs and expansion of its branches
(Sporrong and et.al., 2021).
Some of the reasons for growth of the pharmacy company are adaption of products as per
local tastes, that is the medicines which are generally in use in public. The offering of medicines
which customers find suitable to, taking feedback of medicines which causes allergic reactions
and providing a variety of brands to them for taking the best which doctor prescribes them.
SMEs offering purchase channels in multiple ways, shops at convenient distances from
residence, giving them options of online purchase and delivery have suited them with customer
needs. The online purchases backed up with discounts also offer the customers lucrative deals so
that they visit the website again to buy products. Pharmacy2 U realises the fact and accordingly
gives its customers options to buy as and where they choose to. Also, keeping brand medicines
also helps the company growth prospects go higher.
Government support measures that are beneficial for the SMEs
Governments have always looked upon the SMEs as growth factors of the economy. Yes, the
Pharmacy2U have uses the UK government support and for this the company take the loan
which government provide for the SME business launching and expansion. They offer them
support in form of decreased interest rates for them to avail facility of loans, increase in their
Overdraft limit is recommended by government to banks, less of roadblocks for them to start
business and new operations, encourage them to employ people thus supporting employment
growth rate in the economy and providing tax relief in some percentage to these companies
(Hossain and et.al., 2018). The UK government has always considered them to be the backbone
of economy and supported pharmaceutical sector in many ways mentioned. Pharmacy2U has
availed these benefits and has been able to use judiciously amount available as lending. This has
made company expand operations while leveraging debt and also getting tax rebates for taking
measures to supply medicines during covid period.
CONCLUSION
It can be concluded that the nature of pharmacy business is ever changing and it is a growing
SME which has own challenges to address as discussed about the operational costs and following
strict rules and guidelines. The business has upon self-major responsibility to provide best of

products to the customers. The competitive advantage of the business has been discussed, there
are companies which the Pharmacy2U is competing offline as well as online. The company has
to maintain its business both online as well as offline. The growth and development of the
business to date has been discussed with it dealing with challenges and moving against the odds.
The key challenges which the company faced were highlighted and the SME taking the route of
business growth and sustainability was emphasised. The support measures of government were
discussed for assistance and overcoming the challenges being faced by pharmacy.
Recommendations
 It can be recommended that pharmacies focus on the issue of patent expiry and work on
the factor as increase in number of products has been seen in coming years with increase
in awareness of quality generic products in many countries.
 The pharmacy should comply with the standard practices set as Good Manufacturing
Practices.
 The trend of online growth and ecommerce has been rightly gauged by Pharmacy2U and
should be continued with full capacity during these times.
 Company has also to curb its operational costs and go for cost effectiveness in production
capabilities and this can be backed by scientific technology (Hossain and et.al., 2018).
 The company has to follow the regulatory environments and extend its support maximum
during covid.
 Assisting government in supply of covid vaccines can help the public as well as improve
the image of the company with it taking part in sustainable operations and helping the
country in pandemic situation.
 The government support to it will be continued unparalleled and will further help in
increasing its operations and also getting help in export related pharmacy policies of the
government which can be a crucial growth factor in case of SME.

REFERENCES
Books and journals
Bader, L.R., McGrath, S., Rouse, M.J. and Anderson, C., 2017. A conceptual framework toward
identifying and analyzing challenges to the advancement of pharmacy. Research in Social
and Administrative Pharmacy, 13(2), pp.321-331.
Crespo-Gonzalez, C., Benrimoj, S.I., Scerri, M. and Garcia-Cardenas, V., 2021. Community
pharmacists’ perspectives about the sustainability of professional pharmacy services: A
qualitative study. Journal of the American Pharmacists Association, 61(2), pp.181-190.
Hermina, N. and Saudi, M. H., 2020. Industry Attractiveness, Competitive Strategy and
Company Performance in the Internet Service Provider in Indonesia. International
Journal of Psychosocial Rehabilitation. 24(2).
Hossain, L.N., Tudball, J., Franco-Trigo, L., Durks, D., Benrimoj, S.I. and Sabater-Hernández,
D., 2018. A multilevel stakeholder approach for identifying the determinants of
implementation of government-funded community pharmacy services at the primary care
level. Research in Social and Administrative Pharmacy, 14(8), pp.765-775.
Krylova, O. and et.al., 2020. Analysis of the Internal Environment of the Pharmaceutical
Distributor Operation in Russia Using SWOT Analysis. Open Access Macedonian
Journal of Medical Sciences. 8(E). pp.382-388.
Melushova, I. and Vivdenko, M., 2017. THEORETICAL ASPECTS OF THE FORMATION OF
TRADE ENTERPRISES''COMPETITIVE ENVIRONMENT. Экономика и Финансы
(Украина). (4). pp.30-36.
Priadana, S. and et.al., 2021. The Effect of Strategic Leadership on Competitive Strategy and
Business Performance: Evidence from Indonesian SME's. Annals of the Romanian
Society for Cell Biology, pp.4908-4918.
Sporrong, S.K., Kaae, S., Nørgaard, L.S., Møllebæk, M., Waaseth, M., Arevalo, L.C., Persson,
C.L., Bekker, C.L., Lindell, J.F. and Druedahl, L., 2021. Challenges in qualitative social
pharmacy research: Reflections based on a conference workshop. Research in Social and
Administrative Pharmacy.
1

Sriviboon, C., 2020. The Impact of Strategic Human Resource on the Innovation Performance of
Pharmacy Companies in Thailand: Mediating Role of Innovation Capabilities. Systematic
Reviews in Pharmacy. 11(1). pp.434-442.
2