Pharmacy2u Case Study: SME Growth, Challenges, and Government Support

This case study examines the growth and development of Pharmacy2u, a UK-based online pharmacy, from its inception as a small to medium-sized enterprise (SME). The study, based on an interview with the founder, Daniel Lee, outlines the company's nature, start-up process, business concept, competitive advantages, and growth strategies. It highlights the challenges faced, including initial resistance from medical associations, and the company's responses, such as adapting to industry regulations and mergers. The analysis covers Pharmacy2u's current market position, competitive environment, and government support measures. The case study explores Pharmacy2u's innovations, such as being the first online pharmacy in the UK and its advertising campaigns, and its strategic decisions, including mergers to expand market share. Overall, it provides a comprehensive understanding of the entrepreneurial journey, challenges, and successes of Pharmacy2u, offering valuable insights into SME growth, competitive strategy, and the impact of government support in the pharmaceutical industry.

Managing Small and Medium
Sized Enterprises

EXECUTIVE SUMMARY
The study is based on interview of Entrepreneur of SME which is Pharmacy2u offers online
mail order pharmacy and also provide online doctor services to its customers. The company and
the management is headquartered in Leeds (UK) and was incorporated in 1999. The company is
owned by partners Daniel lee and Julian Harrison. Pharmacy2u has an experience of 20 years in
the field of pharmacy. Currently it consists of 100 employees, working for its customers 24*7.
The study outlined services provided by pharmacy2u are repeat prescriptions by NHS and online
services of doctors for their easy access. Its competitive advantage is, it was the first company to
start this services in UK and also the prescriptions provided by the company are certified by
NHS. The revenue generated by the company in year 2017 was €25.8 million and net income
was -£20.3 million in 2017. For start up's financing requirements Daniel lee invested £100,000
by selling his apartment to meet working capital requirements.
TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................3
FINDINGS.......................................................................................................................................3
Nature of the entrepreneur behind the venture............................................................................3
SME start - up process.................................................................................................................4
Business concept and any sources of competitive advantage......................................................5
Current level of demand and the competitive environment.........................................................5
Growth and development of the business to date........................................................................6
Challenges of managing and running the business......................................................................7
SMEs current growth and development strategy.........................................................................7
Government support measures that are available to help the business overcome the challenges
.....................................................................................................................................................8
CONCLUSIONS...........................................................................................................................10
RECOMMENDATIONS...............................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Small and medium enterprises as per United Kingdom concept can be defined as Small and
Medium Enterprise, if it fulfils 2 out of 3 conditions viz. a turnover of less than £25 million has
employs less than 250 employees has gross assets of less than £12.5 million. It contains the
interview of the owner Daniel lee about his small firm turning into a medium firm pharmacy2u
which provides online mail order prescriptions to its customers. The background of pharmacy2u
is that Daniel used to work for his father in his pharmacy business and that is when the plan of
online mail order prescriptions popped in the mind of the entrepreneur and he started his o0wn
company in 1999. It was started as a small medium enterprise and is continuing to grow towards
being a large company by expanding its operations and services.
Aim
“To outline growth of SME with reference to nature, start up, challenges and governmental
support: A case study on Pharmacy2u”.
Objectives
· To derive nature, concept and start-up process of Pharmacy2u.
· To assess challenges faced by firm in managing successful business operations
· To outline competitive environment and current level of demand of services of Pharmacy2u.
· To ascertain development strategies and governable support of Pharmacy2u.
FINDINGS
Nature of the entrepreneur behind the venture
The nature of entrepreneur was to increase the sales of pharmaceutical prescriptions to its
customers by online mail order services and to grow from SME to one of the large
pharmaceutical company of UK, Daniel lee who founded pharmacy2u in 1997 was to create a
new idea with innovation and full of creativity and to have his own venture by perceiving the
idea that was both possible and desirable to the entrepreneur. The entrepreneur started with an
internet mail – order pharmacy. The entrepreneur's initiative was to deliver online prescriptions
and services to its customers more efficiently and conveniently with low rates. The vision was
always clear to the founder and therefore entrepreneur started business with seeking proper
certification from National Health Service (NHS) (Qurashi, 2017).

The idea of new venture formation is derived from culture, subculture, family, friends
and from family business which was dealt in pharmacy business and owned a chain of chemist
shops in Leeds. After perceiving the idea, it was for individual to have a budget to start a venture
and founder of Pharmacy2U sold his apartment for creation of money to create a website of
pharmacy2u.co.uk for selling online mail order prescriptions to its customers. With all hard work
and efforts pharmacy2u became the first online pharmacy in UK in SME (Verbano, 2015).
Company faces many challenges from National Pharmaceutical Association as well as
British Medical Association to check its business practices and structure, but at last the feedback
received was positive from both the association and the establishment of internet based
pharmacies hyped. The nature and motive of entrepreneur defined creativity, innovation, hard
work, patience and a long vision not just to grow but to be stable in the market and to start a new
era in pharmacy industry. It turns into a customer oriented company which allow them to have
easy accessibility to avail medical services along with positive response of inspection and
recommendation to stay open. The nature of entrepreneur drawn out to be confident, hard-
working and focused.
SME start - up process
At an initial stage the entrepreneur Daniel lee worked for his family's pharmacy business
which was owned by his father and he had a chain of chemist shops in Leeds. While managing
work at father's shops, the entrepreneur came up with an idea to found an internet mail – order
pharmacy company named pharmacy2u for customers. For the setup of the online website the
entrepreneur sold his apartment in order to create the website. After the set of website, the
company used courier service as well to supply medicines to its customers (Gessner, 2015).
The company became the first online pharmacy company in UK which started its set up
in 1999. The two association of UK expressed their concern over the innovation in
pharmaceuticals and filling prescriptions online which were British Medical Association and
National Pharmaceutical Association and they emerged as a challenge for the new start up but
few days after they opened an inspection team was hired in order to inspect their business
practices and structure (Schutte, 2018).
The result of inspection was positive and pharmacy2u got recommendation to stay open
which lead to a new amendment of the 1968 Medicines act for the establishment of Internet
based pharmacies which gave rise to internet based pharmacy company providing prescriptions.

After that company launched first ever advertisement campaign for an online pharmacy and was
used as a benchmark by BBC for electronic transfer of prescription and postal delivery. The
company was fined for selling patents to international scammers but it overcome the difficulty
and announced its merger with Chemist Direct in 2016 and removed its competition. It was
established as SME and with its continuous efforts sooner or later is going to be a company with
high market share.
Business concept and any sources of competitive advantage
The business concept of pharmacy2U is to provide online mail order pharmacy to
customers. It has been involved in shipping the electronic transfer of prescriptions in UK. The
concept was introduced in 1999, although it was not legal to sell online prescription yet the
business was set up and lead to creation of pharmacy2U. The concept was new and fresh when
was introduced but today there are a lot of set ups based on online pharmacy providing services
in UK but pharmacy2U is the oldest. Yes, it has competitive advantage over other firms because
pharmacy2u became the first online pharmacy of UK.
The owner of pharmacy2u is an experienced person as he was before setting up the firm was
managing chain of chemist shops. The another positive factor works for pharmacy2u is that the
competition is not that high, there are firms providing online services for pharmacy but
achievements of pharmacy2u are too high. It got approved by British Medical Association and
National Pharmaceutical Association for its innovation as well as its infrastructure. The positive
review led to an amendment in medicines act to allow establishment of internet based
pharmacies which in a way give rise to this business (Ogunyomi, 2016).
The other competitive advantage was that the company launched the first ever advertising
campaign for online pharmacy. The another competitive advantage was that it was the first
company in UK to produce pharmacy catalogue. Also, it provides non-prescription health and
beauty products for sale as well. It got merged with Chemist direct in 2016 which increased its
market share and sales and customer base as well. Overall the concept of online pharmacy was
introduced by pharmacy2u and also the changes and amendments were done by the company
itself which makes it hold the competitive advantage for itself.
Current level of demand and the competitive environment.
The current level of demand of various services offered by pharmacy2u are based on
prescriptions by NHS and online services of doctors for their easy access. The pharmacy's digital

system makes it easier for people to communicate through online chat, text message and emails.
It has installed ring system platform to give voice responses and to provide self-service to
patients. Its aim is to increase its customer base and to provide them with quality of services with
utmost ease. It is regulated by Care Quality Commission and the commission stated that the
pharmacy2u services are appropriate for customers and are safe in nature.
In providing online services of pharmacy, pharmacy2u ranked 3 in UK. The biggest
competitor of pharmacy2u was clear chemist which was merged by pharmacy2u in 2015. The
another competitor of firm is Lloyd pharmacy, providing same number of services to customers
but has more employees than pharmacy2u which give it an advantage of human resources. The
other competitor of pharmacy2u is express chemist which provide same services but the dispatch
of medicines is quick as well as it provides better after sales service to its customers. The
competitors of pharmacy2u are few but it can improve its services to be in the first position.
Growth and development of the business to date.
Pharmacy2U, an online pharmacy portal which directs the online transfer of prescriptions
in the UK. Founded in 1999 by Daniel Lee and Julian Harrison became UK's first online
pharmacy. Daniel Lee till 1999 supports his family pharmacy business, after that an idea of
doing internet mail order pharmacy strikes Daniel’s mind. By selling own apartment for
£100,000, Daniel started Pharmacy2u.co.uk. In 2000, Pharmacy2U become member of the
European Association of Mail Service Pharmacies & firm named OnMedica invested £2 Million
in Pharmacy2U (Zhou, 2016). The company launched first advertising campaign for online
pharmacy.
In 2001, Pharmacy2U was used as Benchmark for making comparison between prices for
pharmaceuticals by the BBC in UK. In 2003, UK newspaper 'The Guardian' published a new
about the changes Pharmacy2U has made by allowing patients prescriptions to be delivered free
of cost. Pharmacy2U was honoured by the Yorkshire Post's Small Business of the Year Award in
2007. The company's sale has increased to £12 million. The enterprise in 2012 had launched
automated phone prescription service which helps patients in requesting for repeat telephone
prescriptions (Schutte, 2018).
The enterprise in 2015, had to stop its services due to failure of automated dispensing
system. In 2016, Pharmacy2U declared a merger with Chemist Direct and as per NHS Business
Services Authority Statistics, Pharmacy2U became the largest NHS contracted pharmacy. The

enterprise dispenses 3,00,000 items per month (average of 24,417 each month) which is more
than 8 times Homeward Pharmacy. Pharmacy2U was in a legal dispute in year 2018 regarding
the rights of contact details of National Pharmacy Association's members. Recently in 2019,
Pharmacy2U bought the health technology company named Wiggly- Amps to help patients in
ordering online prescription linked with GP records (Farrukh, and et. al., 2015).
Challenges of managing and running the business.
In 1999, the Pharmacy2U became UK's first online pharmacy, the British Medical
Association expelled about the innovation and along with that the National Pharmaceutical
Association also resist against filling of online prescriptions. The concern was because of overall
changes it will go to bring in the Medical Industry's Infrastructure. Further, Pharmacy2U had to
undergone inspection after its opening to assess business policy, practices and structure adopted.
A fine of £130,000 was charged on Pharmacy2U in 2010, as patient's personal data was sold to
International scammers without prior permission.
Due to failure of Automated dispensing system, the enterprise has to stop its medication
services for some time which has affect the continuity of Pharmacy2U and also several patients
get disturbed. In 2017 – 2018, customer of Pharmacy2U grown up to 212% and have patients of
around 32000 who are getting registered every month averagely. The enterprise has adopted
innovating and better technology by making an investment of around £40 million to improve its
medication services and to provide its patient ease and good experience. In 2018, legal dispute
had affected the working of Pharmacy2U as allegation related to the rights of contact details of
the National Pharmacy Association's members was raised (Andalo, 2018).
High speed internet services, better infrastructure & healthcare facility, awareness among
population about ecommerce business and new & innovative digital technologies in healthcare sector
are factors which can help and leads to business growth.
SMEs current growth and development strategy
Pharmacy2U is one of the medium size firm which is NHS contracted online pharmacy
which specializes in delivering online prescription to patients effectively. The current revenue of
pharmacy2u is £25 million with 100 employees and net income of -£20 million (Pharmacy2U,
2018). In 2007, the enterprise was honoured by the Yorkshire Post's Small Business of the Year
Award. Pharmacy2U has raised its customer base by 212% in the year 2017 – 2018 which has
32000 number of new patients getting registered each month averagely. For this growth factor,

the enterprise has made an investment of around £40 million for adopting innovating and better
technology so as to improve its medication services and thus providing its patient with ease and
good experiences. In 2017, revenue of Pharmacy2U was around £25.8 million.
In 2018, Pharmacy2U has dispenses around 3,00,000 item per month having an average
of 24,417 every month which is almost 8 times of Homeward Pharmacy. In 2019, Pharmacy2U
has bought Wiggly-Amps, a company specializing in health technology to provide their patients
a facility of linking GP records with prescription and ordering prescription online. The growth &
development of Pharmacy2U depends on the prescribers i.e. the list of medicines as and when
prescribed by doctor. Thus, prescribers help the enterprise in building business more effective.
Patients can access pharmacy store at any time without stepping out of home which saves time
and also there is a cost difference (Farrukh, and et. al., 2015).
The prices of medicines offered for sale online are available at lower or discounted rate
than the prices of medicines at chemist shop which attracts patients on large basis and hence
brings growth in the business. People has started preferring online pharmacy stores rather than
going to chemist shop because online pharmacy store has every variety of medicines with it
whereas has only selected medicines with it. This has brought a change in the field of Medical
history. With the increase use of Information technology in healthcare sector, it helps the patients to
send prescriptions in electronic form which is bringing market growth to Pharmacy2U business.
Government support measures that are available to help the business overcome the challenges
Pharmacy2U is an online mail prescription pharmacy store which delivers medication
services related to prescription to patients effectively. In 2001, the enterprise produce UK's first
pharmacy mail order catalogue, non-prescription health services and engaged in selling of beauty
products. The government support measures available to Pharmacy2U at the time inspection is
that an amendment was done in the Medical Act, 1968 and in the Royal Pharmaceutical Society
for establishing the online internet pharmacies. Pharmacy2U is registered and regulated by the
General Pharmaceutical Council.
Also, the UK government allowed the electronic transfer of prescription in 2000. If
patient is receiving regular medication for ongoing medical treatment, then National Health
Services along with Pharmacy2U helps patient in Repeat Prescription Service. The General
Pharmaceutical Council regulates the enterprise named Pharmacy2U which provides Online
confidential services of Doctor privately to its patients which is regulated by Care Quality

Commission. In 2015, UK government has taken a pledge to help the patients of UK for better
accessing of online pharmacy services thereby helping the NHS in saving both money and time
(Zhou, 2016).

CONCLUSIONS
From above report it can be concluded that Pharmacy2U is a medium sized enterprise founded
by Daniel Lee. The enterprise is UK's online pharmacy portal which directs the online transfer of
prescriptions to its patients which was founded in 1999 by Daniel Lee and Julian Harrison and
thus became UK's first online pharmacy. From using this online pharmacy portal, patients can
save both time and money which they have to spend in travelling and waiting at GPs and
pharmacies shop. Recently, it has increased its customer base by 212% and continue to serve
every patient at effective cost. In 2001, the enterprise produces UK's first pharmacy mail order
catalogue, non-prescription health services and engaged in selling of beauty products. For
betterment of patient and society at large, Pharmacy2U ensures innovative and updated
technology, methods which are used for improving the experience of patients.
RECOMMENDATIONS
Pharmacy2U is the online pharmacy which delivers online prescriptions services to
patients effectively. Pharmacy2U is UK's one of the SME which has become leading online
pharmacy approved by NHS which serves the confidential online doctor service registered with
UK to its patients privately and also protect the client’s personal details from being sold to
International scammers after paying a fine of £130,000 for the allegation of selling client's
personal data in the year 2010. As, Pharmacy2U is registered and regulated with the Care
Quality Commission and the General Pharmaceutical Council.
For better growth and continuity of business, the enterprise should appoint some Web
Technicians, Web developers who can design, check and fix bugs, update and build user friendly
website with high speed and good personalize content that encourages user to visit site again so
as to avoid failure of Dispensing System and thus achieving business goals effectively.
To increase its market, share and customer's base the pharmacy2u should invest money in
advertisement and also it can provide first free trial service to its customers to attract them to use
their services and to increase their revenue and earnings. To avail more efficient services to its
customers it should have different departments to handle customers with different prescriptions
like acne, hair loss, weight loss, period delay etc. It should have an effective Database
management system as well which can manage the data of customers who has left availing their

services, who has just started taking its prescriptions so that a company can get a clear idea of
where it stands.

REFERENCES
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Online
Andalo, D., 2018. Pharmacy2U. [Online]. Available through:<https://www.pharmaceutical-
journal.com/news-and-analysis/news/online-dispensing-could-save-nhs-12bn-pharmacy2u-tells-
mps/20205034.article?firstPass=false>.

Pharmacy2U, 2018. [Online]. Available through:
<https://suite.endole.co.uk/insight/company/03802593-pharmacy2u-limited>.
Schutte, S., 2018. The best medium-sized businesses in the UK. [Online]. Available through:
<https://realbusiness.co.uk/best-medium-sized-businesses-uk/>.