The Startups Disrupting the Pharmacy Sector - 2019 Update

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2019 Update on Pharmacy Start-Ups

It has been two years since I wrote about the disruptors in the pharmacy space that had attracted my attention. This mix of start-ups was spread across different sectors, including pharmacy delivery, cost savings, and more. In that space of time, we have seen a number of those companies be acquired or cease operations. Several other developments have caught me by surprise, to say the least. My question at the time about where Amazon would go seems to have been answered with their acquisition of Pillpack. Tabula Rasa has made large inroads and has been acquiring a number of companies that I did not expect, such as DoseMe and Prescribe Wellness.

Taking this all into consideration, I thought it would be best to update my 2017 list. Some notable changes are as follows:

  • Combination of Medication Dispensing & Delivery - Previously I had these separated, but a number of delivery companies have folded over time or expanded to also medication dispensing. Most of the dispensing companies have also adopted delivery mechanisms so I thought it best to put them both together at this point.

  • Removed Specialty Pharmacy, Storage, Medication Cost Savings, & Medication Information - Either these companies have been acquired (ZappRx by Allscripts, Iodine by GoodRx) or the fields haven't panned out as I thought. Otherwise, like cost savings, have become focused on only a few companies by investors at this time and no new major players to mention.

  • Added Institutional Pharmacy, Digital Therapeutics, Chronic Disease Management, & Personalized Pharmacist Services - Many of these companies have come to my attention in the past two years, and I can see where they can serve as additive features to the pharmacy profession, or possibly replace currently explored options [by the profession] which I think should be on the professions radar as such. In addition, several of these are areas that I lamented had not seen much innovation from start-ups, which I now feel has changed.

  • I do not have a section on medication adherence, as it is to huge. For more information, see my dedicated page on medication adherence start-ups.

A Look at the Companies

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Medication Dispensing

Overall, this space is getting more and more cramp each year. Many of these companies have received multiple rounds of funding lately, no doubt in part to the success of PillPack. I suspect, that several of these companies hope to exit to other players as well. For example, Walmart was mentioned as a potential buyer of PillPack in the past, and with many of these companies utilizing multi-dose dispensing systems or Strip Packaging services, I would be inclined to believe they hope to take PillPacks place as a possible acquisition. Otherwise, I think several of these companies will continue to expand as well, carving out niches in heavily urban settings where patient population is dense enough to ensure same day delivery is feasible. Rural expansion does not seem high on these companies targets at this current time though. Expansions to Texas and the NorthEast I expect soon, as these companies expand from their San Fran and NY bases.

Digital Therapeutics (DTx)

This group may come a surprise for its inclusion, but hear me out. I think pharmacists may soon become a player in prescribing DTx products in the near future. Recent news highlighted that CVS Health will use a DTx for sleep, and with their expansion to a HealthHub model, I think this could be highly plausible. Many of these products will work well in sync for pharmaceutical drugs currently prescribed as well. Nonetheless, it is still a grey area depending on where the FDA goes with prescriptive authority, and whether reimbursement models pan out for pharmacists to utilize these products.

Direct-to-Consumer Prescribing Services

This group has grown incredibly in the two years I first visited them. I renamed them, as they are really no longer virtual pharmacies I feel (several use TruePill for instance), and rather it is a Uberesque venture for prescribers to get a side-gig as a remote prescriber for low-key diseases that do not need much monitoring or F/U. I think this group is directly in competition with pharmacy push to be prescribers (see what Iowa did for instance), and our desire to prescribe OBC is likely to not get to peak state acceptance before companies like Nurx expand and capture the market. Overall, this will be a huge battleground in the coming years with a lot of money being thrown into the ring with likely only a few companies left in several years I bet.

Personalized Pharmacy Services

Expanding beyond a product-based model, these companies are providing services that revamp pharmacy to a level where I think our clinical services can be appreciated. Several companies though make me concern about the similar Uber mentality of tapping into pharmacists who aren’t full time and taking advantage of the huge number of graduates currently on the market - and are on my radar to see what they do shortly. Overall, I hope this sector continues to grow and that investors start looking beyond how medications are dispensed and delivered or just adherence, but also how to leverage a underutilized workforce.

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Vitamins and Supplements

Not to much has changed here, but more companies as well. One thing that is interesting is the addition of companies who utilize genetic testing to recommend what vitamins or supplements you should be getting. Tespo is also interesting to me as a service that has tapped into the Keurig model for liquid vitamin supplementation and I am curious if that is a good strategy long-term compared to the standard formulations.

Home Lab Testing

I added this section as I feel that pharmacy spaces are still interested in having lab testing done on site. One issue is that Theranos really put a damper on Walgreens and Safeway, who were investors or looking to use that service, and may have put a double-check on the market. These companies though are looking for home testing for STDs, urine screenings, and chronic diseases (e.g., A1c, lipids) which I think patients could get behind. As such, these may be a threat in the coming years to the pharmacy space.

Hospital Pharmacy

Now this is great to see many companies getting into the institutional pharmacy space. For too long most start-ups have focused on the community environment, but I see several of these companies offering novel approaches for the inpatient pharmacy, or services that really can revamp clinical services or product delivery in the hospital by the pharmacy.

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Novel Pharmaceuticals

These companies I added because they are offering novel means of drug delivery (multcomponent pills, infusions at home, etc) which I think if they take off will offer new products for the pharmacist to dispense and recommend for patient care. I think they would potentially make patient lives much easier in terms of drug delivery and administration and could impact disease state management or adherence.

Chronic Disease Management

I feel pharmacy, like CVS HealthHub, wants to get into chronic disease management. Research has shown a high plausibility for us to do so, but these companies are using technology to an extent that will likely outpace using pharmacists as simple health coaches. I would recommend that the any company that wants to use pharmacists for disease management will have to explore some collaborative practice model for now.

The Bottom Line

In the end, I am happy to see a change in companies from just focusing on product-based models but to also clinical/service-based models that can help the pharmacy profession do more and get paid for their professional abilities. Overall, most funding is still falling into the former category, but I suspect as those markets get more crowded and investors and founders wisen up, they will start exploring alternative routes to be the first ones into a potentially lucrative and untapped market.