The rolled-up medical O2O: Just entered the era of multinational competition!
Yesterday, Good Doctor Finance initiated a discussion in the community about pharmaceutical O2O. Surprisingly, dozens of group members engaged deeply, and several groups even got into heated debates. Here are my thoughts.
01.
In short, here's what happened in three points.
① E-commerce growth lies in the healthcare sector, with pharmaceuticals being the main driver, and the growth in pharmaceuticals comes from O2O, which has seen exaggerated growth rates for years;
② Hundreds of thousands of offline pharmacies are saturated, all competing for business; thousands of pharmaceutical companies are also facing sales channel compression, turning to online channels;
③ Add policy incentives like medical insurance support for online payments.
The entire industry exploded overnight.
02.
Pharmaceutical O2O is a natural choice for the public.
The visible benefits include the convenience of online drug purchases, especially for urgent or nighttime medication needs, perfectly aligning with "patient-centered accessibility services," which is why policies support it.
Thus, O2O has maintained double-digit growth rates for years, outpacing other drug sales channels—a reasonable service upgrade brought by the internet.
03.
Major platforms are stirring things up!!!
● Meituan Pharmacy is currently the leader in pharmaceutical O2O, but a sudden personnel shake-up in October saw the former head, Li Jinfei, transferred to the travel division, with Li Xiaohui, former head of medical aesthetics, taking over;
● JD Health just launched a new pharmacy model, claiming no sales pressure, transparent pricing, and a focus on service, aiming to reshape offline retail; its O2O arm, JD Pharmacy, is also making moves with initiatives like "Slow Refund, Price Guarantee, Insurance Payment, Free Shipping," signaling an impending price war;
● Dozens of cities nationwide have enabled medical insurance payments for "takeout drug purchases," with Ele.me and Dingdang Fast Medicine also competing aggressively, especially after Beijing allowed individual medical insurance payments in July, sparking a covert race between JD Pharmacy and Meituan Pharmacy.
With Meituan Pharmacy's leadership change as a turning point, the pharmaceutical O2O industry has officially entered a battle royale!!!
04.
The sleepless leader: Meituan Pharmacy
Why is this signal so critical? Because Meituan is the undisputed leader, with reportedly strong internal growth. A leadership change at this juncture suggests something unusual is afoot.
There are two views in the industry: one internal, suggesting pharmaceutical O2O has peaked and needs a health-savvy leader to expand growth; the other external, with rivals challenging Meituan's dominance, creating pressure and anxiety, hence the leadership change to defend its position.
Meituan Pharmacy's advantages are clear: mature O2O user awareness and a strong delivery network. But its challengers are no pushovers.
05.
The aggressive challenger: JD Pharmacy
The biggest troublemaker is JD Pharmacy, which has been making frequent moves lately. It’s doubling down on O2O, launching a new pharmacy model claiming to be the cheapest within 3 km, and aggressively subsidizing consumers.
Rumors suggest a billion-dollar price war is coming, full of 挑衅感。
Quoting feedback from group member @Michael-liu:
"With four elderly at home, all with chronic conditions, we often use Meituan and JD Pharmacy. Speed-wise, both deliver within half an hour to our suburban home—no clear difference. But prices? JD Pharmacy has dropped significantly this year. Service-wise, we rarely paid attention until a family member had scalp issues. JD’s pharmacist recommended Halcinonide solution after reviewing a video, and it worked wonders."
Ambitious and with late-mover advantages, JD Pharmacy is seen as the biggest threat, with many expecting a showdown.
06.
The steadfast follower: Ele.me Pharmacy
Community surveys show Ele.me Pharmacy is more popular than expected.
In terms of business overlap, Ele.me and Meituan are direct competitors. The runner-up’s strategy is clear: chase Meituan relentlessly, keeping the competition tight.
07.
The small but steady: Dingdang Fast Medicine
A listed pharmaceutical O2O player with local market and brand advantages, Dingdang is a "relatively stable" company. Surviving in a tight space proves its resilience. If platform wars intensify, Dingdang’s acquisition value could skyrocket.
To summarize:
From a broader competitive perspective, offense and defense are still shifting. O2O leaders are building B2C capabilities, while B2C giants are pushing into O2O.
For consumers, platform habits matter. Drugs are just another product, likely following their usual platform preferences.
08.
Two key players: pharmaceutical companies and pharmacies.
For pharmaceutical companies, instant retail has limited impact on prescription drugs but suits OTC drugs, herbal products, and traditional medicines. Whether to partner with chain pharmacies or platforms depends on sales, profits, and operational difficulty.
For pharmacies, it’s a must-join trend. Online or offline, it’s a zero-sum game. Platforms and pharmacies have a complex relationship—both complementary and competitive. Previously focused on sales, this year’s shift is toward profits, making JD Pharmacy’s price war timing critical. More discounts win customers.
09.
Forcing platforms to upgrade medication services.
Current competition revolves around traditional factors: super-low prices, fast delivery, and product variety, which benefit consumers.
But pharmaceuticals serve "treatment" and "prevention." Scientific, standardized, and quality-controlled medication services are the keys to long-term success.
Teacher Sumu summarized the U.S. PBM model: 1. Rebuilding drug services from the value chain; 2. Chronic disease meal kits to reduce missed doses; 3. Long prescriptions; 4. Smart chronic disease management; 5. Drug pricing and catalog management...
10.
Finally, borrowing a phrase: view the pharmaceutical industry through the lens of people’s history.
—Let the public buy and use drugs with confidence; strive to buy less, ideally none.
P.s. Thanks to @卖药的顾先生， @Michael-liu, @苏木， @老匡， @锐凯， @顯偉 Hawke, @池风， @李伟， @老薛， @众托帮龙格， @Terry, @邵总， @方亮， @易总， @康乾盛世， @Mr Chen for their deep engagement in this topic.
Good Doctor Finance · Musings
2024.10.25
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