Opportunities in Prescription Outsourcing: Market to Reach RMB 160 Billion in 2018; Xiaolu Clinic Secures RMB 200 Million Funding

"Prescription Outflow" has emerged as a buzzword in the pharmaceutical retail sector in recent years. Against the backdrop of the broader "separation of prescribing and dispensing" reform, drug sales are undergoing structural adjustments, with out-of-hospital channels capturing the incremental growth driven by prescription outflow.

In the process of absorbing prescription outflows, pharmaceutical companies, distributors, retail pharmacies, and online pharmaceutical platforms have actively explored various models, such as hospital-adjacent pharmacies, Direct-to-Patient (DTP) pharmacies, and new retail formats.

VCBeat has surveyed current cases of prescription outflow in China, aiming to provide a comprehensive analysis of its impact on the industry and future development trends.

Viewpoint:

1- Policy: The Separation of Prescribing and Dispensing Is an Irreversible Trend

Under the “Two-Invoice System,” VAT reform, and distribution sector rectification, pharmaceutical distribution channels have been compressed, making the distribution process more transparent. These measures have also curbed, to some extent, the benefit transfers embedded in drug distribution, thereby creating an opportunity for hospitals to divest from prescription drug sales.

Furthermore, it should be noted that fiscal subsidies and adjustments to medical service prices have played a significant role in dismantling the practice of subsidizing hospitals through drug markups. Fiscal subsidies have, to some extent, alleviated the financial pressure on hospitals following the implementation of zero-markup policies, while adjustments to medical service prices have addressed the issue of physicians’ income.

Overall, driven by the comprehensive reform of public hospitals and the rectification of pharmaceutical distribution, the separation of prescribing from dispensing has become an irreversible trend. Before supporting policies and solutions are clearly defined, the industry will undergo gradual adaptation and experimentation under policy guidance, paving the way for the full implementation of the separation of prescribing from dispensing.

2. Retail Pharmacies Are the Biggest Beneficiaries of Prescription Outflow

In the process of accommodating the outflow of prescriptions, numerous beneficial initiatives have emerged, including DTP (Direct-to-Patient) pharmacies, pharmacy trusteeship, retail pharmacies located adjacent to hospitals, the “Internet +” new pharmaceutical retail model, pharmacy-clinic collaborations, and off-hospital prescription circulation platforms.

Overall, retail pharmacies, particularly chain retail pharmacies, are the primary beneficiaries of prescription outflow. This is because: first, retail pharmacies possess a strong operational foundation, enabling them to systematically meet patient demand for medications and pharmaceutical care services; second, the high coverage of retail pharmacies in China positions them as the preferred choice for residents’ medication purchases; and third, supported by digital tools and prescription circulation platforms, retail pharmacies are enhancing their competitiveness, thereby providing residents with more diversified and precise pharmaceutical and health management services.

3. Outlook: The scale of prescription outflow will reach 160 billion yuan in 2018

By 2018, the outflow of prescriptions will bring an incremental increase of more than RMB 130 billion or RMB 165 billion to the out-of-hospital market. Out of prudence, if the target value is lowered, the scale of prescription outflow in 2018 will be at least over RMB 100 billion.

Prescription outflow is an irreversible trend. New specialty drugs and long-term medications for chronic diseases will be the first to shift out of medical institutions, with retail pharmacies near hospitals and Direct-to-Patient (DTP) pharmacies being the primary beneficiaries. In the process of absorbing these outflowing prescriptions, stakeholders should optimize their operational structures and enhance service capabilities to adapt to medical insurance cost containment measures and patient needs. Prescription outflow will cultivate a new blue ocean in pharmaceutical retail.

Report:

Opportunities in Prescription Outflow: Market Size to Reach RMB 160 Billion in 2018, Benefiting Retail Pharmacies as the DTP Model Gains Favor

For more content, please refer to the VCBeat Knowledge Base!