The Pharma Industry’s E-commerce Strategy

The strain on U.S. supply chain continues to be a leading issue in many industries. Shortages of warehouse workers and truck drivers are forcing businesses to find new ways to streamline their supply chain. The implementation of AI technology and robots is becoming increasingly popular, but people are still experiencing delays for online orders. This includes over-the-counter pharmaceuticals that are being purchased in record numbers online after 2020 quarantines propelled this industry forward. The questions now are how will these supply chain delays affect online pharmaceutical orders, and what strategies are businesses implementing to overcome this challenge?

The Pharmaceutical Supply Chain

The pharmaceutical supply chain is made up of manufacturers, wholesalers, distributors, and retail pharmacies that sell directly to consumers. Manufacturer options are limited as the top 10 pharmaceutical companies by sales in the U.S., have 60% of the market share. Most of the retail and pharmacy leg of the supply chain relies on big wholesalers for supply, but larger brands like CVS provide their own infrastructure. 

The Delays

The pharmaceutical industry is facing delays for similar reasons as any other industry. The majority of the production for these goods is overseas. With travel restrictions and employee shortages slowing down ports, the U.S. is experiencing a shortage of even the most common prescriptions. With 97% of the U.S.’s antibiotics being imported from China the delays pose a major concern for the medical industry.

The Solution

Pharmaceutical companies are investing in more automation and robotics for the counting, filling, and dispensing of medications to offset the labor shortage. They are implementing automated storage and retrieval systems (AS/RS), automated guided vehicles (AGVs), and goods-to-person technologies. Other businesses have adopted strategies to provide prescriptions directly to the end consumer.

Amazon is beginning to distribute pharmaceuticals due to an increase in the number of consumers buying over-the-counter (OTC) products that are non-controlled online. After purchasing PillPack in 2018, Amazon Pharmacy is utilizing its infrastructure to navigate the online pharmacy industry. Along with prescriptions, 80% of the drugs used in daily life can be ordered online now. Consumers are stocking up on these medications because of the supply chain delays.

The pharmaceutical industry is dominated by a handful of companies in the U.S., and they all are forced to purchase from a handful of manufacturers and suppliers. This makes it difficult to overcome delays when there are not many other options to utilize. With companies like Amazon entering the market and using their own supply chains, it creates more diversity in the market to avoid disruption.