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EF: When you started DatamedIQ 5 years ago, what was the need you identified in the market for this venture?
DZ: DatamedIQ was initially founded as a joint venture of three companies. It involved the three biggest ePharmacies in Germany: Zur Rose's DocMorris, Shop Apotheke, and Medpex, now a part of the Zur Rose Group as well. Our vision was to bring the speed and transparency of the state-of-the-art eCommerce to the pharmaceutical industry because, at that time, information providers only cared about monthly sellout data.
We wanted to establish a fully-fledged digital solution for pharma companies to look into the data and understand what their actions do to the market. It would provide market insights into what their competitors were doing, who their customers were, and how the customers behaviour transformed over time. These insights were largely unknown before.
We saw a need and decided to enter that market in order to transform pharmaceutical companies into digital leaders. That is where we are today, five years later. We help our customers, work with data, and make smarter and faster decisions based upon those insights.
EF: Could you elaborate on what DatamedIQ provides and how it disrupts the market?
DZ: We are an information provider selling insights about the ePharmacy market in Germany to pharmaceutical companies. We buy data from ePharmacies, aggregate this data, and then extract unique insights about the market, the competition and the customer’s behaviour. We then put this on a platform and sell it to the pharmaceutical industry.
Our clients use this data mainly to understand the performance of their brands, i.e., to see their growth rates, gains, or losses in market share within the online market. They also leverage this data to guide their investment decisions into the market with online campaigns and see how it will impact the sales for ePharmacies. Customers can access different segments of data to analyze the impact of specific campaigns.
Today we are supporting the marketing and sales teams at almost every major pharmaceutical company in Germany. However, our vision is a lot broader. We want to become the e-health insights specialists in Europe. We are growing from Germany to other countries and moving away from simple ePharmacy data to telemedicine data, eRecords, and whatever else we can get our hands on in the digital healthcare market. We also want to make and support use cases for different customers with consulting and training. It is very ambitious, and it is part of our five-year plan. We have made our first steps into Europe. It's very difficult because there are different jurisdictions and players in each market, and you must talk to a whole lot of companies. We are a small company with only 20 employees at the moment. We did not rely on external financing or investment, so we essentially bootstrapped this company with the ePharmacies. We are doing internationalization, buy new data, and work on new use cases and features, all of which are very ambitious.
We are in contact with the top pharmaceutical companies on more or less every level. That means from the c-level to the operative level. We count almost the whole ePharmacy market in Germany as suppliers. We are talking to them, and they are coming to us to seek advice. In terms of innovation, pharmaceutical companies tell us their challenges, and we start thinking about how data from ePharmacies or other healthcare players such as telemedicine providers can help.
We have a large network of share- and stakeholders. Through them, we are loosely connected to the largest telemedicine operator in Germany and to companies like smartpatient, a Shop Apotheke companion app for multiple diseases like Multiple Sclerosis. In Germany, we have an infrastructure where everyone is interconnected.
EF: What challenges and opportunities do you see in the German pharmaceutical industry?
DZ: ePrescription has been announced to launch in Germany for quite some time now. Germany has the opportunity to advance to a higher stage of digitalization in the pharmaceutical market. The current prescription model is still paper based. A prescription is written on paper, then physically submitted to a pharmacy, then to the insurance provider, and used in every process step.
With ePrescription, we can avoid paper and enable services like telemedicine. We can have a tele-doctor who can send a prescription, and it is up to the patient to choose whether they bring it to the local pharmacy or send it to an ePharmacy. This also has a lot of value in terms of data collection. The paper-based prescription is no longer required, and as a side-effect, a rich and standardized data set is created that can possibly be used for research. Apart from the challenges of patient data security and personal data security, there are a lot of opportunities for all the different types of stakeholders in the market. This transformation may lead to a digitally supported healthcare system.
With telemedicine, there is a great opportunity to reduce the high workload of doctors. A doctor can handle everyday cases such as prescription extensions and sick leave notes via telemedicine, reducing the number of people in the waiting room. All other topics can be handled in person by the doctor.
There is also an initiative from the data side. German data protection laws are very strict. European data protection laws (GDPR) and national data protection laws sometimes prevent us from doing important research cases with patient data. We have a federal initiative under which a German data center is created where different stakeholders may gain access to anonymous data for research purposes. This is an opportunity for all pharmaceutical companies to work on research subjects with highly important data sets no longer marked by personal identifiers.
The data center removes personal information and gives us data that, for example, helps us better understand complex oncologic problems. It is really difficult to get data for research on a scale as large as this, because data protection laws always protect it, but initiatives as the German research data center (FDZ) may ease the access to data sets that are anonymous, safe, and extensive.
When we started DatamedIQ, we had already talked about prescription data's importance. Currently, about 22% of all OTC purchases are perfomed online in German. At the same time, ninety-nine percent of the prescription business is done in brick-and-mortar pharmacies, while only one percent is served by online pharmacies. We are always moving our market share goals around because, in Germany, the digital transformation is slowed down by the many stakeholders, including the brick-and-mortar pharmacies, the doctors and the insurances. Let us take the doctors as an example: With the ePrescription, they have to invest in new equipment, change their processes, and overcome many challenges. Nobody likes to change, especially when they are in an advantageous position, such as doctors and pharmacists. This resistance is not limited to ePrescription. E-patient records, for example, also face opposition. When we have a legal basis for collecting pharmaceutical and patient records, and we find a possibility to share the data for research purposes, it is a great way to help find cures for diseases we cannot tackle today.
The E-patient record may be a great opportunity for us patients because we are moving and changing. Imagine seeing a new doctor tomorrow with a disease you had five years ago. Even if you cannot explain what you had, he can look into your ePatient record and understand your symptoms by seeing your radiologic pictures.
I also think that events like the pandemic can be a strong accelerator for the digitalization in Germany. The first telemedicine appointment I had was during the pandemic. Normally, I would go to a doctor, give him my card, and it is all paid for, but with the telemedicine during COVID times, it was not yet covered under insurance. I tried it anyways because I did not want to go to a doctor's office and expose myself to COVID.
EF: We're living through challenging times where the supply and value chains are being affected by global inflation and the energy supply crisis. How can we create partnerships to secure the supply chain in Germany and Europe?
DZ: We have data sets on availability, pricing, etc. The big challenge of whether or not a product is out of stock is something we experience. Although defects, i.e., unavailable products, are registered and publicly communicated through the BfArM, we provide information about availability because sometimes a defect is preceded by a sinking distribution in the ePharmacies. This is something where we can raise a red flag for the pharmaceutical company, the competitor, and everyone else to see. This enables everyone to think about strategies for how we can solve that. This is something we are envisioning.
Regarding pricing, we partner with well-known consulting companies to analyze pricing data and provide strategies. This is a big problem as prices increase, and they need to figure out what they are doing. Are they raising the prices by the same amount, or are they raising them two or three times more?
Data is part of the entire process, from production to after-sales. You can use data to make decision points. A few pharmaceutical companies are now posting notifications of unavailability, and this helps companies to take the necessary measures accordingly.
We only have e-commerce data, which is sometimes a problem because 80 percent of the business is still made in brick-and-mortar pharmacies. However, e-commerce data has a significant advantage: it is an amazingly fast data set. We can provide you with highly segmented and fast data, and you can use this data as an indicator for the whole business. For example, we can give you information about what was sold yesterday in North Hamburg by a 35-year-old male. If you see sales or distribution going down in e-commerce, it is highly likely that the same will apply to offline brick-and-mortar companies. This may happen a day or two later, but most of the times it will happen in the same amount, more or less.
The data value chain is not only about logistics but also product development. Today, we only have ordering transaction data. With ePrescription and ePatient records, you can think of providing accurate information on how to be timelier about the needs of a particular patient type. Despite not being able to detect a specific patient need, we can disclose the patient's attributes and understand the relationship with medicines and be able to provide better care.
EF: Pharmacies are shifting to a more value-based model, trying to own the relationship between the patient and the pharmacy. How do you think this trend will impact the growth of the online pharmacy market?
DZ: The ePharmacies have been and remain to be the growth channel. 2022 was the first year where the offline pharmacies had a higher growth rate than the ePharmacies, which was only due to the strong references to ePharmacies in 2021 and a very low reference for the brick-and-mortar pharmacies. If you think about it as a consumer, ePharmacies can be understood as a convenient and price efficient channel. Consumers are used to buy their products online and have them delivered to their doorstep. With the launch of the ePrescription and the raise of telemedicine, all of that will help grow a digital health infrastructure. The challenge we have at the moment is that in Germany, the doctor cannot tell you to go to a particular pharmacy. Hence, we currently cannot have an integrated end-to-end process but need to create and forward tokens or paper from one healthcare provider (e.g., the tele-doctor) of our choice to another (e.g., the pharmacy).
If we think of it as a process, that would not be recommended, you would have an e-consultation, an ePrescription, an ePharmacy, and 15 minutes later there is a drone coming in at your doorstep that delivers your medication. For some people – and thinking especially of the chronically ill – this would be a perfect world. There is a lot of growth potential in digitalization in terms of the whole value chain. But I think with the German jurisdiction and the strong healthcare stakeholders, we are talking about a period of at least ten years until this works in an integrated way. However, in a short term, ePrescription will lead to major growth in ePharmacies because consumers will understand that, at least for some indications, it is easier to just get pharmaceuticals online and have them delivered to your doorstep.
EF: Your company is celebrating its fifth anniversary. What are some of the key milestones that you have already accomplished that you want to celebrate with your team?
DZ: Our product seems to be so relevant, that we work with every major pharmaceutical company today. That is a great achievement for these five years. Breaking even after only two years and getting the company running was also another great achievement. From a product perspective, we had the idea to get the pharmaceutical companies' data that help them make faster and smarter decisions. This worked because we have a lot of customers who go beyond just accessing the monthly data that was available before we came into the market and also access data on a more granular basis. We worked together with our customers and constantly challenged the accuracy of our data, which quickly led us to an outstanding data quality.
We are proud that our customers are increasing the usage of our data. We have customers that started with 2 people working deeply with the eCommerce data, and now we sometimes work with client-teams of 20 people or more. This is a clear example of our significant impact. Two years ago, digital data was not that important. Today, however, our data has become integrated everywhere, and people are starting to understand how they can combine the data from DatamedQ with data from elsewhere. They are starting to analyze it from a business perspective, look at the datasets, and produce a valuable source of truth. This is something we achieved together with the pharmaceutical companies. Our achievement at DatamedIQ is that we have the most accurate, fastest, and most transparent dataset.
We build a team of great people at the right time to get the right product to our customers. This is something I am very proud of.
