Read the Conversation
EF: What motivated you to join the apo.com Group, and what has been your proudest achievement so far?
OS: As a biochemist and an international pharmaceutical healthcare expert with over 30 years of experience in the industry, I have occupied different positions over the years in different parts of the value chain. Being appointed as the CEO of apo.com Group was an exciting opportunity for me, as I would be leading a company and actively advancing digital health with tangible assets rather than a startup with solely a conceptual idea and an application.
I have gained a deep understanding of how e-commerce works, and my quest to innovate it for breakthroughs in health has been a steep learning curve for me. apo.com Group comprises over 350 employees generating revenue of approximately 300 million Euro yearly. It is a highly agile organization, allowing us to shape and refine the company's structure daily.
The soft start of e-prescriptions since 2021/22 is starting to open up a significant part of the Rx market in Germany to online /digital pharmacy business. The addressable market is growing from €10-15 billion (OTC/BPC markets plus 2% of the current paper-Rx market) today to €50-60 billion (OTC/ BPC plus major share of the full Rx market) , and would allow the innovative online pharmacies to generate an unprecedented increase in revenue while simultaneously innovating the entire pharmaceuticals distribution landscape by introducing new services and demonstrating a modern pharmacy concept.
There is vast potential for innovation in e-commerce and online marketing through artificial intelligence in content creation, service scalability, and logistical material flow management. Such innovation requires conceptual, creative, and inspirational capabilities to motivate and guide the respective online pharmacy teams. It also necessitates strong employer branding efforts to attract the right individuals, as the right team can make all the difference. We must introduce positive disruption through innovation to assist society to achieve a continuously leading and affordable healthcare environment in Germany. Our market share and consumer satisfaction prove our trending success in this regard.
EF: How are you leveraging digital tools and technology to drive progress within your organization?
OS: The foundation of our business model involves combining a traditional online shop with reliable logistics. Given that logistics is an asset-intensive industry, scaling requires access to a diverse range of assets, products, and dependable suppliers, as well as a significant financial investment for purchasing products to sell. Scaling may only be feasible for some pharmacies due to these requirements. Establishing modern market tiers for products and services that extend beyond performance marketing is important. While performance marketing is now commonplace, service marketing, fast-moving consumer goods marketing, branding, and pharma marketing are also critical components, focusing on improving quality of life outcomes and passing these benefits onto our customers.
During my tenure at apo.com Group, we have been focused on developing a business model that surpasses that of other online and brick-and-mortar pharmacies. We are about to achieve this by investing in various elements such as modern business intelligence techniques, artificial intelligence, databases, and content creators. Understanding our customers has allowed us to address their concerns and meet their expectations more effectively. As a result, we have garnered over 4.000,000 active customers who place orders frequently, helping us to grow continuously and increase all our core business KPIs since 2021 We gain thereby insight into people's daily lives, their health needs, and the daily problems they encounter.
At apo.com Group, our goal is to establish long-term customer loyalty by building trust-based relationships. We want our customers to experience our services and be convinced of their value to them. However, executing this strategy at scale with thousands of daily customers is challenging and requires us to push ourselves out of our comfort zone. More than merely providing convenience at a low price, we need to generate an even higher trust than chronically ill people have in their brick-and-mortar pharmacies and pharmacists. We must continuously grow faster and provide unique and better offers to become more relevant and meaningful to society.
The launch of the new e-prescription-driven business unit is our gateway to the €50-60+ billion-euro market that caters to chronically ill patients. It is important to note that in Germany, there are 83 million inhabitants and 33 million of them are considered chronically ill. Specifically, at least 8.5 million people have diabetes, and 5.6 million patients suffer from heart disease, high blood pressure, and hypertension. These figures help us to understand the market and to offer quality of life improving services as a pharmaceutical company.
We also established a new team in our prescription business, patient engagement managers, who concentrate on specific indications. Every quarter, these managers spend time and work together with patients and physician organizations focused on those indications to improve the quality of our services.
Additionally, our company has developed various interactive services, some involving automation and others requiring human interaction. We plan to introduce a new branch-like structure, known as "Healthguide" (in German: “Gesundheitslotse”), which will help patients navigate their issues and lead them to the appropriate solutions. Ultimately, the best solution is a human-to-human video consultation on our telepharmaceutical video platform. Therefore, we offer telemedicine services, including dermatologic physician services and diagnostics, through our partnership with Dermanostic. Our prescription service is designed to develop into a customer-oriented subscription model, and we are currently working on these innovative offerings and refining them. We have invested millions of euros over the last 18 months to prepare for our launch into the German market and are ready to release these new services once the path ahead with e-prescriptions has been cleared. Our new brand offer will specifically target chronically ill patients, who account for approximately 80% of the prescription market value in Germany.
In the global trend towards innovation, people are actively pursuing new and innovative startups and are embracing new services and offerings. However, Germany's regulatory environment and pharmaceutical laws must still adapt to these changes driven by digitalization and online commerce opportunities.
The German pharma healthcare market environment industry is still an attractive investment destination due to its strong infrastructure and skilled workforce. However, we need new legal approaches to scale up operations. Countries like the Netherlands have shown that this is possible by applying the European law that enables the ownership of an unlimited number of pharmacies by a capital company as a legal entity type.
apo.com Group is committed to Germany and has its headquarters in Leipzig, Germany. However, we had to move into the Netherlands with our pharmacy and invested into logistical operations to build the most modern and automated pharmaceutical distribution site, which industry experts have recognized as unique. We have significant scalability enabled by the high-tech automation set-up in our logistics operations. For example, over 90% of the picking processes is already fully automated through the use of picking robots. Furthermore, the company invests in its in-house software development, considering it an asset.
EF : How do you attract the best talent?
OS: As a company, we face the constant challenge of finding the right talent to sustain our growth at a certain level of quality. Despite offering a unique and innovative environment to over 350 employees with lean hierarchies that foster freedom and creativity, it is not easy to market our online pharmacy to potential hires who may need more information on how it operates. We strive to enlighten people in this aspect and make the experience more tangible.
We recently hired three ambitious and well-educated young female pharmacists into our NL pharmacy who are part of our positive narrative. We want to give more arguments and motivation to why people choose to study pharmacy at university. While some may aspire to do clinical trials or discover new APIs as a classic choice, we offer an opportunity to work in a vibrant digital workplace where their education can be enhanced to new requirements using new digital techniques and services to serve the needs of the aging population in a patient centric and cost-effective way.
EF: What is the importance of innovation for the German market?
OS: As a healthcare professional with 30 years of experience, I am a firm believer in driving innovation forward, and I know there are companies and investors with the resources, intelligence, and passion needed to make it happen. However, we also require policymakers to create the right environment and incentives to embed innovation in the industry.
Although online pharmacies offer innovation potential, it is important to recognize that their business model extends beyond simply shipping packages and competing on pricing through basic logistics, performance marketing, and IT proficiency. At apo.com Group, we want to be a fundamental element in covering the entire product and service value chain. My ultimate goal is to take our patient service to the next level by utilizing patient access to provide not only package shipments, but also pharmaceutical and telemedical services that analyze and anticipate patient needs.
We aim to enhance our service design through data intelligence. By gaining real-time insight into our customers' actual and potential needs, we can offer more efficient advice and support for the entire family ecosystem. For instance, the responsibility of taking care of elderly and sick individuals often falls on their children, grandchildren, and other family members. In such cases, specific companies may provide care services, which can be financially burdensome for the family network and may affect the needs of everyone involved over an extended period. To tackle this challenge, we conduct extensive psychological research to comprehend people's diverse situations. Mental health and practical, day-to-day organization are also important considerations and online pharmacies can help advise, support, and create a network of services in that regard.
We are also considering the possibility of becoming a pharmaceutical company. Our private-label product line is a major focus, and we are investing significantly to expand it. Our ultimate objective is to provide accessible medication to the public, especially during periods of uncontrolled inflation. Under our own trustworthy label, we intend to promote products that offer the same efficacy and quality as their branded counterparts. We are expanding our portfolio while collecting more data to improve our services. We additionally plan to create much more value from direct patient access as this is one of the key differentiating and value enhancing factors that an online pharmacy has. This goes beyond the scope of traditional online pharmacies, positioning apo.com Group as a HealthTech company that provides more than just fulfillment services for pharmaceutical packages.
Drug safety is of utmost importance for patients in medication handling and potential adverse effects. Ensuring drug safety is a critical consideration for us, given that highly trained individuals with access to the best databases in the world maintain our databases and AI knowledge. Our logistics also feature automated quality control measures, which enables us to offer systematically further improved levels of drug safety than traditional brick-and-mortar pharmacies. In this regard, Germany has the potential to be more innovative and forward-thinking.
On the topic of patient safety, we also advocate for bridging the gap between physicians and pharmacists in Germany. As a pharma/ HealthTech company, our goal is to contribute our skills and knowledge to ensure that therapies are more successful and that there are higher safety and better measurable outcomes, pushing the benefits for society and the overall cost efficiency of the healthcare system. Other European countries have taken successful measures in this sense, e.g., in the Netherlands, a pharmacy has to check on a patients vital parameters such as kidney function before supplying specific drugs with a specific active pharmaceutical ingredient. Adapting and adopting such initiatives in Germany will not only enable cost reduction, but also provide better services for an aging population that is placing a significant burden on the healthcare system.
If no action is taken, Germany may face difficulties in continuing to provide financial support for the healthcare system in the future. As a result, they may be forced to decrease the coverage of certain medical services, similar to what is happening in the United States. This could result in high out-of-pocket expenses for patients, leading to a decline in the population's overall health. Such a situation is not desirable in Europe.
EF: What are the next steps in promoting growth and innovation in the pharma healthcare market?
OS: The launch of the e-prescription platform and implementation of new AI-based services and quality management systems for improved drug safety will be the biggest steps forward for online pharmacies. Our current focus is on the €10-15 billion market, but we aim to expand and work on the €50-60 billion market with an expanded portfolio, increased branding, and distribution.
We could set up and replicate our successful NL distribution operations with robotics in any other European country within only 15-18 months.
As we look ahead to the next 10-20 years of societal change, this is a promising sector for investment. German medicine health budgets are expected to reach 80 billion euros in the next 5-7 years, and the Rx market as the largest part of this market is growing at a value pace of 6-7%. With our market share in buying, selling, and manufacturing private label products, as well as our services, data, and direct patient access, we offer a unique value proposition compared to traditional pharmacies. Classic research driven pharmaceutical companies are B2B businesses and do not have our advantage of direct patient access, which is a highly important asset. Overall, we are committed to showcasing the potential of our business model and expanding our reach to better serve patients in Germany and beyond.
