introduction to pharmacy business models
TRANSCRIPT
BUSINESS MODELS IN COMMUNITY PHARMACIES
DAVID HOLDFORD, R.PH., M.S., PH.D.
PROFESSOR, VIRGINIA COMMONWEALTH UNIVERSITY SCHOOL OF PHARMACY
Slides to Accompany “Marketing for Pharmacists”
OUTLINE
1. DEFINE BUSINESS MODEL
2. ILLUSTRATE A BUSINESS MODEL CANVAS
3. IDENTIFY GENERIC BUSINESS MODELS THAT ARE COMMON IN COMMUNITY PHARMACIES
4. PROVIDE EXAMPLES OF PHARMACY BUSINESS MODELS
1. DEFINE BUSINESS MODEL
A BUSINESS MODEL DESCRIBES HOW A BUSINESS OR ELEMENT OF A BUSINESS PLANS TO MAKE MONEY.
BUSINESS MODELS ARE GENERAL, LARGE PICTURE VIEWS OF THE BUSINESS & TYPICALLY GLOSS OVER THE OPERATIONAL DETAILS OF THE BUSINESS
BUSINESS MODELS DESCRIBE:
• THE CUSTOMER VALUE PROPOSITION
• RESOURCES & PROCESSES
• THE PROFIT FORMULA
2. ILLUSTRATE A BUSINESS MODEL CANVAS
THE BUSINESS MODEL CANVAS IS A POPULAR TOOL USED FOR PLANNING & DEVELOPING BUSINESS MODELS
THE BUSINESS MODEL CANVAS ORIGINATED FROM BUSINESS MODEL GENERATION (HIGHLY RECOMMENDED) & HAS BEEN ADAPTED FOR MANY TYPES OF BUSINESSES INCLUDING HEALTH CARE
THE BUSINESS MODEL CANVAS HAS BEEN ADAPTED TO TEACH PHARMACISTS AND PHARMACY STUDENTS HOW TO DEVELOP INNOVATIVE BUSINESS MODELS
Organization's Operation -
Specific background about the organization
where the product/service will
be provided
Strengths, Weaknesses - Your
capabilities to serve targeted
customers
Value Proposition - The case you make
to customers
Secondary Customers - all
other people you may serve
Partners - People or businesses who can help you serve
customers
Opportunities, Threats - Potential
for success or failure in the
market
Primary Customers - People or
businesses you want to serve
Competitors - People or
businesses who compete for your
customers
Costs - Financial and nonfinancial inputs needed to serve customers
Pricing & Reimbursement - Sources of revenue to sustain your value proposition
Communication Plan - How your
value proposition is communicated
to customers
Implementation - Details about critical factors for success of business
Business Model Canvas for Pharmacy Services
Lean Canvas is adapted from The Business Model Canvas (http://www.businessmodelgeneration.com) and is licensed under the Creative Commons Attribution-Share Alike 3.0 Un-ported License.
Organization's Operation -
Specific background about the organization
where the product/service will
be provided
Strengths, Weaknesses - Your
capabilities to serve targeted
customers
Value Proposition - The case you make
to customers
Secondary Customers - all
other people you may serve
Partners - People or businesses who can help you serve
customers
Opportunities, Threats - Potential
for success or failure in the
market
Primary Customers - People or
businesses you want to serve
Competitors - People or
businesses who compete for your
customers
Costs - Financial and nonfinancial inputs needed to serve customers
Pricing & Reimbursement - Sources of revenue to sustain your value proposition
Communication Plan - How your
value proposition is communicated
to customers
Implementation - Details about critical factors for success of business
Business Model Canvas for Pharmacy Services
Lean Canvas is adapted from The Business Model Canvas (http://www.businessmodelgeneration.com) and is licensed under the Creative Commons Attribution-Share Alike 3.0 Un-ported License.
3. IDENTIFY GENERIC BUSINESS MODELS THAT ARE COMMON IN COMMUNITY PHARMACIES
ALL BUSINESS MODELS FALL INTO THREE GENERIC CATEGORIES
1. SOLUTION SHOPS
2. VALUE-ADDING PROCESS BUSINESSES:
3. FACILITATED NETWORKS
ALL BUSINESS MODELS FALL INTO THREE GENERIC CATEGORIES
1. SOLUTION SHOPS
2. VALUE-ADDING PROCESS BUSINESSES:
3. FACILITATED NETWORKS
PROVIDE SOLUTIONS FOR COMPLICATED
PROBLEMS THAT HAVE FEW, IF ANY, CLEAR SOLUTIONS
ALL BUSINESS MODELS FALL INTO THREE GENERIC CATEGORIES
1. SOLUTION SHOPS
2. VALUE-ADDING PROCESS BUSINESSES
3. FACILITATED NETWORKS
INTERMEDIARIES IN MARKETING CHANNELS
WHICH TAKE SOMETHING FROM ONE CHANNEL
PARTNER (E.G., MANUFACTURER), ADD
VALUE (E.G., REPACKAGE MEDICATIONS AND
PROVIDE COUNSELING ON PROPER USAGE), AND THEN
SHIP THEM OUT TO THE CONSUMER OR NEXT
INTERMEDIARY
ALL BUSINESS MODELS FALL INTO THREE GENERIC CATEGORIES
1. SOLUTION SHOPS
2. VALUE-ADDING PROCESS BUSINESSES:
3. FACILITATED NETWORKS
PROVIDE VALUE BY CONNECTING PEOPLE
TOGETHER VIA A PLATFORM THROUGH
WHICH USERS CAN OFFER THINGS OF VALUE TO EACH
OTHER
4. PROVIDE EXAMPLES OF PHARMACY BUSINESS MODELS
SOLUTION SHOPS
Solution shops provide highly customized solutions to clients. Problems are unique and not subject to solutions that can be standardized with algorithms. Examples include:
B2B consulting firms which advise businesses on solutions to delivery, financing, & management
Research & development organizations which design studies to evaluate causal relationships between health care interventions and outcomes
VALUE-ADDING BUSINESS PROCESSES
This describes any health care that can be guided by rules-based & standardized processes. The majority of pharmacies are value adding process businesses.
Most pharmacy services in community, specialty, hospital, & managed care setting are relatively routine and lend themselves to standardized treatment plans
A specific type of value-adding process is a retail business model
RETAIL BUSINESS MODELS (RBM)
Community pharmacies often work under RBMs which generate most of their revenue by selling merchandise. RBMs typically offer one (or more) value propositions:
Economic: offers customers greater utility (compared to competitors) for the costs paid
Functional: offers greater convenience by finding the right products with as little time and as little physical and cognitive effort as possible
Emotional: offers an arousal of feelings associated with the act of shopping itself, e.g., enjoying shopping with others, the hunt-for-a-bargain, relaxation
Symbolic: attaches positive consumption meanings associated with shopping itself e.g., shopping local, shopping that supports environment
Economic? Functional? Emotional? Symbolic?
http://time.com/3947684/starbucks-cold-brew-nationwide/
FACILITATED NETWORKS
This describes any platform that provides value by connecting individuals and organizations. Facilitated networks in pharmacy include:
pharmacy associations which connect individuals & organizations around a similar cause
pharmaceutical purchasing groups where members band together to negotiate lower prices from suppliers
SUMMARY
The business model may be the only thing a pharmacist needs in planning for a new service OR
It might be a tool to help build a business plan
Models need to evolve as they are tested in real marketplace conditions
