Still Early, Online Pharmacy Market Has High Potential

Healthy lifestyle awareness has been a key driver behind the growth of the pharmaceutical retail sector. According to the findings Ken Research, the Indonesian pharmaceutical retail market is expected to grow at a CAGR of 1,5% based on sales revenue during 2019-2025.

There are several factors behind this increase, namely the number of National Health Insurance - Healthy Indonesia Card (JKN-KIS) participants continues to increase. As of December 31 2019, the number reached 224 million people and has exceeded 83% of Indonesia's total population.

In addition, generic drugs are widely used as an alternative to patented drugs which are expensive, due to the majority of raw materials being imported. As a result, through the JKN program, the government regulates prices so that medicines are affordable for people's purchasing power.

If we look at the life expectancy figure for Indonesians in 2019, it was 71,59 years, an increase from 0,25% in 2018. This statistic reflects better ways to control infectious diseases and better medical facilities, ultimately leading to an increase in the average age. average Indonesian population.

Meanwhile, the increasing age of a person is also influenced by increasing spending on health care. With the increase in the elderly population, domestic sales of medicines also tend to increase from year to year.

To increase accessibility and convenience, almost all major pharmaceutical retail chains have started offering their products through portals online, including startup players. Even if it's a pharmacy online maybe it's not very popular in Indonesia, yesterday's pandemic opened it up pintu wide for this business. Slowly but surely, the impact of his presence began to be felt.

Not just the ease and speed of purchasing medicines, there are many critical issues that are being resolved by digital players with a digital approach as well. These include the supply chain and authenticity of pharmaceutical products. Lifepack is one example of a startup that is trying to ward off this issue.

The startup started by former Tiket.com official, Natali Ardianto, said that the challenges in the pharmaceutical world in Indonesia are still faced by fake medicines. From the data he quoted, even as much as 25% of the total national drug sales revenue was contributed by sales of counterfeit drugs that entered Indonesia illegally and did not have the BPOM mark.

“This condition creates consumer confidence to buy something online online so it's low because they're afraid the item isn't genuine. This challenge is the same as when starting Tiket.com, many people asked whether this was a scam or not. This [challenge] is very common for technology companies to adopt in a still market early adopting this," he explained to DailySocial.id.

Still from the report he quoted, in 2025, the pharmaceutical industry in Indonesia is predicted to grow twofold with an estimated market value of close to $20 billion. Pharmacy online only covers 3,5% of the total figure.

He also emphasized that the most deep-rooted problem in the pharmaceutical industry is not a lack of pharmacies and distributors, but rather an inefficient supply chain system. Take, for example, pharmacies located in hospitals or clinics where it is very easy to redeem prescriptions from doctors at the hospital. It is also easy for pharmacies to stock supplies of medicines with a high sales frequency.

On the contrary, it is very difficult for consumers to redeem their medicine outside the hospital where the prescription was made. The reason is because of the various pharmaceutical brands circulating for one molecule. Meanwhile, in general, the doctor writes the prescription not from the molecule but from the brand.

“So the pharmacy in the hospital supplies products based on what doctors often write. What about small pharmacies outside hospitals? That's what we're trying to solve the problem.”

Co-Founder & President Director of Alodokter Suci Arumsari agrees that the pharmacy business online This has great potential in reaching a market that is increasingly adopting shopping online. Challenges that need to be overcome, such as regulatory compliance related to drug sales, building consumer trust in product quality and safety, and competition with large players.

For the record, Alodokter provides telemedicine services as its main business which is equipped with a supporting ecosystem, one of which is the Aloshop online pharmacy which has been introduced since 2021. The company collaborates with pharmacy partners and couriers last mile for delivery.

In building trust, Alodokter takes a number of preventive steps to minimize violations. For example, for non-OTC drug sales that require a doctor's prescription, every drug purchase at Aloshop will be strictly verified. Prescriptions uploaded for purchase will be verified again by the team of doctors at Alodokter.

"This can include validating whether the prescribed medication is appropriate to the patient's medical condition or not, whether the medication can be redeemed freely. online or not (because there are some drugs that cannot be purchased online online) etc. "We also continue to educate users about the importance of doctor's prescriptions for certain medicines," explained Suci.

Stock supplies at Aloshop come from the official pharmacy partner network, such as Century, Apotek K24, Watsons, and Viva Medika. This extensive network allows Aloshop to be accessed and deliver to its users throughout Indonesia.

Supply chain issues

Natali continued, as a pharmacy player online, inefficient supply chain in pharmaceutical industry This is motivated by applicable regulations. Each pharmacy must work with at least 80-100 distributors. The distributor usually takes its inventory from several factories.

The next problem is if the pharmacy is a network, such as K24. So each outlet spread across each city must look for a pharmaceutical distributor in each city and must form its own legal entity. Regulations also do not allow pharmacies in one city to purchase supplies from another city.

“Because from the past the way distributors worked was to acquire pharmacies using sales. In each city there is their own sales team and they have their own targets. So purchasing- it's notcentralized, negotiating discounts at each point is therefore inefficient. This inefficiency is extraordinary. The pharmaceutical industry was the lateest [to technology adopter].”

To overcome this big issue, Lifepack acquired the distributor company Tetama (PT Global Logistic Medika) in September 2022. Tetama is a pharmaceutical distributor company online which distributes medicines & health supplements. This company handles the supply chain for Lifepack pharmacies and pharmacy businesses.

Through solutions one-click purchase, Mainly want to make it easier for pharmaceutical businesses to order products. They can fill stock of products from various manufacturers more easily without needing to make lots of order letters, not to mention that to get discounts, they have to negotiate long hours.

This feature can be accessed thanks to Tetama's API integration with VMedis, for mobile devices to report the with anti-leak stock and procurement features (preventing fraud). The latest data shows that there are more than 2.900 pharmacies and clinics in the VMedis network.

Tetama itself provides a complete stock guarantee, starting from prescription drugs, over-the-counter (OTC) drugs, supplements, vaccines, beauty products, to fast-moving consumer goods (FMCG). Plus, it has obtained certificates for Good Medicine Distribution Methods (CDOB), Cold-Chain Product (CCP), BPOM, Medical Devices, and others in order to maintain optimal product quality during the distribution process.

In addition to ease of inventory of goods, for mobile devices to report the Primarily it also makes it easier for pharmacies to record records based on expired batch codes. "Date expired they must be recorded one by one, first expire first out. So the movement of goods is according to the date expired. When you receive the goods, now you just have to put them on the shelf."

It is stated that there are 500 pharmacies, clinics and hospitals that use solutions from Tetama at Lifepack. Lifepack has four pharmacies spread across Jakarta, Cakung, Bandung and Surabaya. Even though it is called a pharmacy, it is actually very different from most other offline pharmacies. Because this pharmacy is located in a warehouse area, it does not accept direct purchases by consumers.

"Our consumer segmentation is different, we only target patients suffering from chronic diseases, such as diabetes and hypertension who have to take medication every day. So buy your medicine periodically through us. By focusing on that, our service will be more detailed and specific. Before the medicine runs out, we usually always remind them."

Patients with chronic diseases, according to 2018 Riskesdas data (Basic Health Research), account for 20% of the total patients in Indonesia. But the costs they have to pay are up to 70% higher because the price of the drugs they buy is quite expensive.

Apart from offering extra services for chronic disease patients, Lifepack has the Lifepack for medic application, for nurses and doctors. In this application, doctors can directly write prescriptions for their patients. Patients do not need to queue to fill their prescriptions because the medicine is sent by Lifepack. The doctor can also see whether the patient is taking the medicine or not. As many as 2 thousand specialist doctors have used this solution.

“Lifepack also has an application for end-user but it's not play activity We."

Positive outlook

For Natali, the pharmaceutical industry will dominate the world of health. In developed countries, such as China and the United States, even India, the use of online pharmacies is de-facto common. “In China, people go straight to pharmacies because they are available screen for consultation online with a doctor and can immediately get the medicine. Digital pharmacies will become commonplace.”

He continued, “This pharmaceutical industry challenging because changing culture takes a long time and I hope that support from all parties will really help us all."

For this reason, Lifepack, through Tetama, will continue to boost its performance so that pharmaceutical distribution can be more evenly distributed to all points in Indonesia. In this way, consumers wherever they want can access medicines at the same price in Jakarta, without having to buy them from neighboring countries.

It is claimed that currently the business contribution from Lifepack and Tetama pharmacies is equal, namely 50:50. Tetama's contribution is targeted to go further because in the future there will be more for mobile devices to report the pharmacies that will join forces to purchase pharmaceutical supplies more efficiently.

"We set prices not far from the HET (highest retail price), remaining competitive because there are other players who set prices above 20%-30% of the HET. Our dream is to provide much cheaper prices, but efficiency continues to increase. "Because the more volume is purchased, the more discounts [from distributors] will be, so the selling price can be lowered."

Antler Indonesia Partner Agung Bezharie Hadinegoro conveyed generally healthtech in Indonesia there are still gaps that need to be addressed. At the same time, in the regional realm, Indonesia has always been an important market that represents the birth of many new opportunities.

Existence founder startups that have an interest in this sector can be a great opportunity to fill this gap. In responding to innovation in this sector, it is necessary to realize that most ideas come from initiatives or point bread experienced by the founders themselves.

“Our efforts are focused on hearing the stories behind their motivations for getting involved in the healthcare sector, as well as how they want to provide the best solutions to their target users. "The advantage of this approach is that the resulting solutions tend to be more relevant and can directly address concrete problems in the world of health," said Agung.

So far, Antler does not have a special managed fund for this sector because its approach is still agnostic. However, when looking at the portfolio of companies that Antler has produced, it can be seen that many founders have interesting passions healthtech.

“This may indicate that, although there is no explicit focus, the potential and interest in this sector remains.” Antler's portfolio in Indonesia specifically for healtech is: CareNow, Healthpro, Qalboo, Sesama Care, and Ziwa.