In recent years, the emerging “Internet + X” concept has ushered all industries into a new era of digital transformation in China. The traditional pharmaceutical industry, which is beset by convoluted and costly distribution channels, slow payment cycles, a dearth of pharmacies in underdeveloped regions, an uneven distribution of medical resources, and patients’ unjustified distrust of smaller hospitals, faces difficulties in meeting the higher-level medical needs of the people. All these issues are readily addressed by the two new business models enabled by “Internet + X”: healthcare e- commerce and online diagnosis and treatment. To some extent, this new trend is forcing traditional pharmaceutical companies to carry out digital transformation.
The digital transformation of traditional pharmaceutical companies is made mainly in combination with e-commerce or mobile health through several specific routes, such as B2B, B2C, and O2O. This study analyzes the impact of the digital transformation of pharmaceutical companies represented by Dingdang Health from the dimensions of pharmacies, pharmaceutical companies, and user experience. Specifically, the analysis of pharmacies is focused on operational capabilities and the single-store profit model; that of pharmaceutical companies is focused on financial data; and that of user experience is focused on third-party reviews, drug prices, and online diagnosis and treatment.
This study finds that pharmaceutical companies’ smart pharmacies significantly outperform traditional pharmacies in terms of operational capabilities, especially in inventory turnover, product lineup, service radius, and average store revenue; with the rising penetration of online drug stores, the single-store profit model suggests that smart pharmacies perform substantially better than their traditional counterparts. The financial data of pharmaceutical companies reveal that fulfillment expenses comprise a major part of online pharmacies’ expenses, but that digital transformation does not decrease their marketing costs, as one might expect. In terms of user experience, smart pharmacies hold a clear advantage over traditional pharmacies in terms of third-party reviews, ratings, drug prices, and online diagnosis and treatment. However, the immediacy and professionalism of drug consumption dictate that traditional pharmacies cannot be completely replaced by smart pharmacies.
