From Microsoft, Amazon, etc. to enter the pharmaceutical retail industry, we can see the changes of the pharmaceutical industry in the United States. The time has come for M & A integration and cross-border integration

There are a lot of hot events in the American pharmaceutical retail market recently In January 2019, Microsoft announced that it would cooperate with Walgreens boots alliance, the first Dalian chain drugstore group in the United States, WBA) entered into cooperation; in November 2018, CVS health, the US drug retail giant, announced the acquisition of Aetna with a transaction amount of US $70 billion; in September 2018, CIGNA's acquisition of the largest independent PBM and express scripts, the largest drug retail company in the United States, was approved with a transaction amount of US $52 billion; In June 2018, Amazon announced the acquisition of pillpack, an online pharmacy, for nearly $1 billion The company was founded less than five years ago From the news and information, we can summarize two major trends of the drug retail industry in the United States: 1 Cross border cooperation is becoming more and more frequent, and the cooperation between drug retail and medical insurance, medical services and even Internet giants is becoming more and more close, and new service forms emerge in endlessly; 2 Entering into the super trading time, the acquisition and merger events continue, and involve a large amount of money The trading object has surpassed the general industry integration, and more and more integration is carried out along the upstream and downstream of the industrial chain Learn from others, and you can see the gains and losses Due to the differences in the medical security system, the industrial landscape of the United States will not be 100% reproduced in China, but the essential law of industrial evolution is the same In other words, to understand why the drug retail market in the United States is "not calm", and the reasons behind it, may have some industrial guidance The structure of this paper is as follows: 1 Dynamic interpretation of the pharmaceutical retail industry in the United States: giants are competing to enter the market; 2 Analysis of the general environment of the pharmaceutical market in the United States: the road of integration is just beginning; 3 New technology accelerates the transformation of traditional industries: Yunda material and mobile intelligence blockchain; 4 What is the shape of the pharmaceutical industry in the future: from products to solutions Dynamic interpretation of the pharmaceutical retail industry in the United States: the giants rush to join us Let's analyze the recent hot events in the pharmaceutical retail industry in detail The first is the cooperation between Microsoft and WBA in January Microsoft, as the largest operating system and software company in the world, has recently surpassed apple in market value and become the company with the highest market value Its growth secret is cloud service and AI WBA is the parent company of Walgreens, which was merged by Walgreens, an American chain drugstore giant, and boots, a British drug distributor in 2014 After the merger, it has become the world's largest listed company mainly engaged in drug retail and distribution, with a market value of nearly 70 billion US dollars WBA has operations in 25 countries and regions (mainly in the United States and the United Kingdom), with 18500 pharmacies, including nearly 10000 in the United States, more than 2000 in the United Kingdom, more than 1000 in Mexico, and more than 390 drug distribution centers, with 415000 employees Revenue in 2017 was $131.54 billion Wobolian is also the shareholder of Meiyuan Bergen, the largest drug distributor in the United States, and Guoda pharmacy, the largest chain drugstore in Dalian, China The cooperation between Microsoft and Wabo union mainly includes the following contents: Wabo Union will transfer its IT system to Microsoft azure cloud service platform, and all employees will use Microsoft Office suite; Microsoft and Wabo Union will look for new partners in the pharmaceutical industry together to build a medical service network; develop chronic disease management solutions together with microsoftware, and provide support from Microsoft cloud service and AI technology In addition, wobolian will open "digital health corner" in 12 pharmacies to sell digital health hardware The "marriage" of Microsoft and Wabo union is a long-term plan that will last for seven years Both companies attach great importance to this cooperation Satya NADELLA, chief executive officer of Microsoft, and Stefano pessina, executive vice chairman and chief executive officer of wablian, serve as the platform for cooperation It is believed that this cooperation is mainly aimed at confronting Amazon, the common "enemy" - competing with the two companies in the fields of cloud service and medicine retail respectively The cooperation content is a new direction for both companies Microsoft can take the opportunity to go deep into the pharmaceutical industry, while waobo can provide more services for customers Stefano pessina, CEO of Wabo Union (left), Satya NADELLA, CEO of Microsoft (right), and the official website of tuyuan Microsoft In addition, we will talk about the changes of pharmaceutical retail and PBM business in the United States Whether CVS merges with Aetna Insurance or Xinnuo merges with fast prescription, it is a clear evidence of the changes in this field There is also a role between payer (medical insurance, commercial insurance) and drugstore - PBM is drug welfare management, whose function is to process and review patients' prescriptions, and connect drug demand to retail drugstore (sometimes it also sends by mail) PBM is the product of the American medical insurance system The starting point is to control the cost, and the core logic is the centralized drug distribution CVS is the largest PBM organization in the United States, with more than 90 million management members and more than 4 billion prescriptions processed each year ESI express prescription was the largest independent PBM organization before There are many reasons for CVS's merger with Aetna Insurance or Xinnuo's merger with ESI, including the further reduction of drug profits (as will be mentioned below, generic drugs account for a larger proportion of prescriptions in the out of hospital channel, while the profits of generic drugs continue to decrease), the natural cooperation between insurance and PBM, and drug retail business, etc And technology giants' involvement in drug retailing is also an important reason - especially Amazon Amazon hopes to dominate more than online retail This e-commerce giant has been trying to change the medical ecology, use its advantages and skills to subvert all aspects of medical treatment, from the pharmaceutical supply chain to medical insurance management, to bring non-traditional business model, logistics and information technology infrastructure to the industry, and improve customer satisfaction Amazon's actions in the field of health care include: in early 2018, Amazon announced a joint venture with JPMorgan Chase and Berkshire Hathaway for health care; before that, Amazon purchased pillpack, an online pharmacy, for nearly $1 billion In the future, Amazon's layout in the medical field may go deep into pharmacy, laboratory testing center, emergency care, health benefits, etc., which is a huge threat to the "traditional" retail pharmacy and medical insurance industry Amazon's medical layout conjectures that cbinsights insurance, PBM, and drug retail began to integrate, and technology companies began to be interested in the pharmaceutical industry The industry integration picture is now available The reasons behind the change will be analyzed below Analysis of the general environment of the US pharmaceutical market: the road of integration is just beginning to be the main theme of the US pharmaceutical market in the near future, and the main reason is that the general environment is mature First of all, from the perspective of medical and health costs, we can see the pharmaceutical market in the United States According to the comprehensive data compiled by Guoxin Securities Economic Research Institute, the per capita medical expenditure in the United States in 2017 was 10224 US dollars, and that in China was 3712 yuan Per capita health spending in the United States is 19 times that of China But the imitative drug is only 2.2 times At the same time, the amount of services (excluding medical devices and drugs, including insurance and other categories attached to services) reached 25 times The per capita medical expenses of the United States and China and the proportion of medical and health expenses in GDP of some countries are roughly broken down From the perspective of growth, the proportion of medical and health expenses in the United States has reached about 18% of GDP The future growth space is limited, mainly due to opportunities for structural adjustment China has less than 5% growth space As the country with the highest medical expenditure in the world, the proportion of generic drug use in the United States has continued to increase in the past, while the amount of consumption has continued to decrease In 2017, generic drugs accounted for 90% of prescriptions, but only 23% of sales Nearly half of the cost savings of generic drugs in the United States are between 76% and 100%, which means that the price of generic drugs is 3 / 4 lower than that of original research drugs In order to solve the quality and price problems of generic drugs, the relevant departments have successively launched the consistency evaluation policy and the volume purchase policy of generic drugs The proportion of prescriptions and sales of generic drugs in the United States in 2011-2017 the rapid launch of new products is an important reason why it is difficult for us generic drugs to obtain excess profits From 2000 to 2010, the U.S FDA approved an average of 23 new drugs every year Since 2010, the U.S FDA has approved an average of nearly 36 new drugs every year The rise of biological drugs and small molecule targeted drugs has produced more new drugs than in the past From the perspective of drug distribution channels, the degree of "separation of medicine" in the United States is relatively high, coupled with a perfect prescription management system, the terminal structure of drug distribution is quite different from that in China According to the statistics of sales scale, the proportion of internal and external channels in the US drug market is about 3:7, and the main external channels include retail chain drugstores, single drugstores, PBM mail order, supermarket drugstores, etc In terms of market share, chain drugstores account for more than 40% of the market, single drugstores account for less than 15% of the market, PBM mail order accounts for 25%, and supermarkets and professional drugstores account for 20% From the perspective of the role of the industry chain, the role of the medical industry chain in the United States and China must be the same, including the government, medical insurance department, pharmaceutical and mechanical enterprises, distributors, medical service institutions, etc the difference is that the commercial insurance in the United States is developed and accounts for a large proportion of the medical and health expenditure, so it has a direct demand for cost control and has developed perfect means of cost control, such as PBM and DRGs And so on The role of the pharmaceutical industry chain takes DRGs as an example The version currently implemented in the United States is medicardergs, which includes 26 major disease diagnosis categories and 989 diseases In the United States, DRG is very suitable for the treatment of short-term inpatients because the average length of stay of non long-term maintenance treatment diseases is very short and the difference of medical expenses between different patients is quite small However, the types of mental hospitals and rehabilitation hospitals with longer average length of stay are excluded from the scope of application of this method To sum up, the main reason for the beginning of the integration of the pharmaceutical market in the United States First of all, the medical and health expenses in the United States have accounted for a very high proportion of GDP, and steady growth will replace rapid development; the industrial model has been very mature, such as generic drugs, medical insurance, drug retail, etc., and the scale adjustment will replace the innovation of technology, products, and service models; the capital operation model is mature, and the industrial precipitation and convenient financing channels provide sufficient funds for M & A integration; The synergy brought by the upstream and downstream integration mode of the industrial chain will provide new profit space, such as the upstream and downstream businesses closely linked, such as API generic drugs, medical insurance medical insurance fee control, pharmaceutical retail insurance, etc., with obvious scale effect and little difficulty in integration; New technologies reduce the difficulty of management, such as cloud services, collaborative office and other information technologies provide convenience for cross industry and cross regional management, and the difficulty of integration is reduced after integration New technology accelerates the transformation of traditional industries: in essence, the pharmaceutical industry is a strong technology driven industry - whether it's drugs or devices, the basis of the existence of innovative enterprises is the discovery and successful commercialization of a certain technology or a certain kind of technology, such as large-scale medical equipment, innovative therapy, etc However, the pharmaceutical industry is also a "traditional" industry, whose technical iteration is often ten years or even decades, and needs a lot of experiments and data support to get approval When new technologies such as cloud, big material and mobile intelligence are gradually mature and are gradually implemented in the vertical industry, it will accelerate the "transformation" of traditional medicine industry We also take the U.S market as an example In terms of cloud computing, the cloud computing service providers in the field of life sciences include Oracle, an old manufacturer, and veeva, a new upstart Since its inception in 2007, veeva has had almost all of its customers