Sale of medicines in marketplaces gets closer. What is the impact on pharmacies?

Anvisa revoked today all resolutions and provisional measures that prohibited the sale of medications by Shoppe, Rappi, iFood, Mercado Livre, and Americanas – a move that makes the definitive release of this type of sale by marketplaces increasingly closer. The revocation comes in the wake of law 15,357, from March this year, which allowed supermarkets to have pharmacies within their spaces and permitted pharmacies to contract digital channels and e-commerce platforms for logistics and delivery.

Anvisa revoked the previous resolutions because they were no longer in line with the new legislation – but said that the revocation “does not imply automatic authorization for the marketing of pharmaceutical products,” and that this is subject to regulations that have yet to be issued. “It was an important administrative step, but it was not the definitive release.

It’s as if it were clearing the ground because it will regulate soon, but, strictly speaking, it has not released anything yet,” said an executive from the pharmacy sector, who believes that the regulation should come out this year.

With the release getting closer, the sell side has already started to consider the potential impacts on the pharmacy sector. At BTG, analyst Luiz Guanais said he sees today’s announcement as the removal of a regulatory uncertainty about the marketplace model, but that he does not see “a fundamental change in who can sell medications,” since the law still places the figure of pharmacies at the center of the transaction.

“We continue to believe that the competitive moat of large pharmacy chains… goes far beyond physical proximity. The success of pharmaceutical e-commerce depends on the combination of qualified traffic, assortment depth, stock availability, and service level, areas in which large omnichannel networks have relevant structural advantages,” he wrote.

For him, “a dense network of stores functions simultaneously as a customer acquisition infrastructure, stock base, and a distributed fulfillment network, allowing an established network to combine a wide assortment with fast delivery and click-and-collect.” According to Guanais, this makes the model of players like iFood and Mercado Livre continue to depend on partner pharmacies for assortment, stock precision, and fulfillment quality.

It’s different, therefore, from food delivery. “Medication purchases require a specific molecule, dosage, brand, or presentation, making the availability of each SKU and the quality of the assortment much more important,” he wrote. “Smaller independent networks can offer iFood geographical capillarity, but they cannot replicate the breadth of assortment, stock depth, purchasing scale, customer data quantity, and service standardization of the largest networks.”

BTG has a ‘buy’ recommendation for the three largest listed players in the sector: RD Saúde, Pague Menos, and Panvel. The pharmacy sector has executed a massive digital transformation in recent years, going from R$ 1 billion in digital sales before the pandemic to R$ 27 billion today. “Today, all our stores are already logistics hubs with real-time stock visibility,” Sérgio Mena Barreto, the president of Abrafarma, which represents large pharmacy chains, told Brazil Journal.

“When a sector has this technological infrastructure and logistics solution already in place, like we do, the entry of marketplaces does not change the game that much.”

But he said there is a growing concern about the impact that sales on marketplaces may have on the supply of pharmacies in more distant regions of the country. “In the US, what they call ‘pharmacy desertification’ is happening. With the advancement of digitalization, there are regions – usually poorer and more distant – where you can no longer find a physical pharmacy less than 10 miles away, and this is causing a significant health problem.”

Contrary to common sense, Barreto said that those who will end up using marketplaces more are the large chains themselves, not the small ones, since they are the ones with stock, sales capacity, and working capital. “Abramarca’s networks are in 1,600 cities. In the remaining 3,500 cities, only small ones are left. If marketplaces start to supply these small cities with stock from large ones, there is a risk of a general breakdown and pharmacy desertification in these regions,” he said.

Today’s announcement comes four months after Mercado Livre started a pilot project for selling medications in the 1P format (buying products and selling directly to consumers). The project was made possible by the acquisition of Memed last year, which had a pharmacy license in São Paulo. iFood was already selling medications on its platform, in the 3P model, even before the approval of this year’s March law – but it was running a significant regulatory risk, which now no longer exists.