Monday, 10 June 2024 Reading time : 3 minutes

Conveniently fill prescriptions from home or while travelling and have them delivered: this is possible throughout Germany since the start of this year. After a two-year delay, doctors are required to issue prescriptions electronically since 1 January. Ever since, patients no longer receive their prescriptions on paper, but in digital form. Mail-order pharmacies have been waiting for this step, hoping that the progress in digitalisation will boost online sales of medicines. 

The Swiss online pharmacy DocMorris, which generates most of its sales in Germany, is at the forefront of this development. At the beginning of April, the Thurgau-based company was the first provider in the German market to launch an app that allows customers to redeem their e-prescriptions. Redcare Pharmacy, DocMorris' main competitor, has since followed suit. Together, the two companies control more than 80% of the German e-pharmacy market, according to a study by consulting group EY in 2023.

Role model Sweden
The market potential for mail-order pharmacies appears considerable, at least on paper. In Germany, sales of prescription drugs totalled around EUR 60 billion in 2022, according to data from the statistics platform Statista. However, less than 1% of this is generated online, according to DocMorris. A look at Sweden, where e-prescriptions have already been established for several years, is therefore encouraging: around 13% of prescription drugs are obtained online, as reported by the journal ‘Pharmazeutische Zeitung’.

But, despite the promising environment, investors remain sceptical. Although DocMorris shares rose by more than 30% at the beginning of the year, they are now trading around 16% lower at just under CHF 62.00. Its German rival Redcare Pharmacy has also lost ground and is trading 12% lower. 

Race for market share
The stakes are high for DocMorris. The company was fully committed to the introduction of e-prescriptions in Germany and got into serious trouble due to the delay Only the sale of its Swiss business to Migros last year averted bankruptcy. DocMorris is now using its newfound financial flexibility to step up marketing activities in order to win the race for market share. The half-year results should give a first indication of whether these investments are paying off. However, equity analysts have very different views on the company's success potential, as a look at the target prices shows: they range from CHF 69.00 to CHF 130.00 over a twelve-month horizon.

Redcare Pharmacy seems to be in a better position. The company, which is headquartered in the Netherlands, is well established in the non-prescription medicines market and is therefore less dependent on the e-prescriptions business. 

Investment idea
For investors who do not wish to invest directly in online pharmacies, a Barrier Reverse Convertible may be an attractive alternative. The product offers a limited downside protection while paying a guaranteed coupon.

Barrier Reverse Convertible auf DocMorris und Redcare Pharmacy
Coupon: 15.00% p.a.
Barrier: 50%
Maturity: 6 months
Valor: 132914203

Indicative terms

 

Disclaimer
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