E-commerce in pharmaceutical business: An overview


E-commerce in pharmaceutical business

There is no doubt that the Internet is changing the way we conduct business. The very nature of the web has made it possible for companies to interact and exchange information with each other and with their customers real-time in a seamless and efficient manner. Companies are using the Internet in a variety of ways to enhance their business performance by providing product and service information to customers; negotiating prices and contracts; placing, receiving and tracking orders; filling and delivering orders; paying and receiving payment.

The purchasing, selling, and exchanging of goods and services over the Internet is referred to as e-commerce. E-commerce can be broken into four main categories: Business-to-Business (B2B), Business-to-Customers (B2C), Customer-to-Business (C2B), and Customer-to-Customer (C2C), which are, in essence, various segments along the ecommerce value chain.

The “Click-and-Jump” character of web surfing has caused several changes in customer and vendor behaviour. For example, a shopper can easily navigate from one “storefront”to the other in a blink of an eye, making his/her comparative shopping easier. This before could have been impossible when considering the physical distance between the different retail stores.

Online product information allows a much faster time to market as a new product can be “introduced” as soon as its first unit is available. Providing online product and other information to customers allows flexibility on price, product portfolio and promotions. The Internet makes information located at a central source (the vendor’s web server) available to anyone with Internet access, so that a change in price, product portfolio or promotions only requires one database entry.

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The pharmaceutical sector also is equally being increasingly influenced by the Internet. Online drug-stores are attracting attention to pharmaceutical companies as they continue to shape the future of drug purchasing and have created new relationships between patients/customers,retail/wholesale pharmacies and drug companies. Especially with the recent advocacy of cashless economy by the Nigerian central bank, e-payments and e-transactions are already taking roots in Nigeria, and some pharmaceutical businesses are already exploiting the opportunity and enjoying the benefits therein.

Many studies have shown that businesses are driven to gain competitive advantage by innovative technology. However, to enjoy the gains of e-commerce, it is important that the business model/strategy in operation is considered – how e-commerce would optimize the business strategy, the potential cost and revenue impact etc – all have to be considered.

 Revenue opportunities of e-commerce

E-commerce allows companies to boost revenues by direct sales to customers. Manufacturers and wholesalers/distributors that do not have direct contact with customers in traditional retail channels can use the Internet to shrink the supply chain by bypassing retailers and selling directly to customers.

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Furthermore, the iniquitousness of the Internet permits access at any time from any place interms of order placement to online drug stores. Customers that are often busy at work and, thus, not be able to place orders during regular business hours can place orders at night when most physical retail stores are closed.

Another benefit of e-commerce is how it annihilates almost completely the factor of geographical location. For example, customers in Abuja can visit the online store of a wholesale pharmacy located in Lagos, go through the product catalogue and price list, put orders and make payments in real time.

E-commerce can also speedup revenue collection. When one considers the amount of time and effort taken in processing payments by cheques which usually takes up to 48 hours, online payments either by bank wire transfer or credit/debit cards which is processed instantaneously becomes much more appealing.

Cost impact of e-business

A firm considering integrating ecommerce into its business model should think about the cost impact on business processes. In other words, will the adoption of ecommerce result in a reduce cost in processing and fulfilling orders placed by customers? Will it reduce facility and transportation cost significantly and minimise wastages in the supply chain cycle?

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For a firm whose business reach covers a large geographical area, e-commerce will enable it to centralise facilities because online sales allow the separation of order placement and order fulfillment. Site costs may decrease as direct customer-manufacturer contact and geographical centralization eliminates or reduces the number retail sites or warehouses.

E-commerce can also decrease processing cost as it increases the amount of customer participation. For example, customers purchasing online do all the work of selecting the product, placing an order, and paying.

Many e-businesses can also centralise inventories because they do not have to carry inventory close to the customer. This geographical centralisation reduces required inventory levels because of increased economies of scale in the supply and reduced aggregated variability in the demand. A major advantage of e-business is that, by separating ordering from fulfillment, increased flexibility in operations is gained to implement postponement.


  1. Does PCN presently have a guideline or regulation as to starting an e commerce site for both OTC nd prescription drugs?

  2. Hi there! I could have sworn I’ve been to this blog before
    but after reading through some of the post I realized
    it’s new to me. Anyways, I’m definitely delighted I found it
    and I’ll be bookmarking and checking back often!

    • This is a very educative site and like we all know that information is power . This is very important as it is related your health and many people do take it for granted until when they have issues related to their health and start running up and down seeking the fastest way out which in the long run becomes very hazardous to life .


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