Determinants of Business Model Choices for New Entrant in the Pharmaceutical E-commerce Environment

Ge Yang

SAGE Open, 2024, vol. 14, issue 4, 21582440241295813

Abstract: The COVID-19 pandemic has significantly impacted the pharmaceutical retail market, leading to rapid growth in the pharmaceutical e-commerce industry. Currently, the new entrant has three options for business models: offline pharmacy model, normal e-pharmacy model, and Direct-To-Patient (DTP) pharmacy model. To address this issue, this study constructs a dual-channel model that considers the enhancement coefficient of medication experience and incorporates a hospital that dominate the pharmaceutical retail market using the Hotelling model for each of the three models. The study utilizes dual-channel competition theory to compare and analyze optimal pricing and maximum profit of supply chain members under the different models, providing a decision-making mechanism for the new entrant. By comparing profits, the study finds that the DTP pharmacy model outperforms the traditional pharmacy and normal e-commerce models, providing the highest profit and the best medication experience for patients.

Keywords: Dual-channel model; DTP pharmacy; pharmaceutical e-commerce; new entrant (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:sae:sagope:v:14:y:2024:i:4:p:21582440241295813

DOI: 10.1177/21582440241295813

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