This presentation defines business models and describes the elements to pharmacy business models.

1. ELEMENTS TO
PHARMACY BUSINESS
MODELS
DAVID HOLDFORD, R.PH., M.S., PH.D.
PROFESSOR, VIRGINIA COMMONWEALTH
UNIVERSITY SCHOOL OF PHARMACY

2. Slides to Accompany “Marketing for Pharmacists”

3. OUTLINE
1. DEFINE BUSINESS MODEL
2. ILLUSTRATE A BUSINESS MODEL
CANVAS
3. DESCRIBE THE ELEMENTS TO
PHARMACY BUSINESS MODELS

4. 1. DEFINE BUSINESS MODEL

5. A BUSINESS MODEL
DESCRIBES HOW A BUSINESS
OR ELEMENT OF A BUSINESS
PLANS TO MAKE MONEY.

6. BUSINESS MODELS ARE
GENERAL, LARGE PICTURE VIEWS
OF THE BUSINESS &
TYPICALLY GLOSS OVER
THE OPERATIONAL DETAILS
OF THE BUSINESS

7. BUSINESS MODELS DESCRIBE:
• THE CUSTOMER VALUE PROPOSITION
• RESOURCES & PROCESSES
• THE PROFIT FORMULA

8. 2. ILLUSTRATE A BUSINESS MODEL
CANVAS

9. THE BUSINESS MODEL CANVAS
IS A POPULAR TOOL USED
FOR PLANNING & DEVELOPING
BUSINESS MODELS

10. THE BUSINESS MODEL CANVAS
ORIGINATED FROM BUSINESS MODEL
GENERATION (HIGHLY RECOMMENDED) &
HAS BEEN ADAPTED FOR MANY TYPES OF
BUSINESSES INCLUDING HEALTH CARE

11. THE BUSINESS MODEL CANVAS
HAS BEEN ADAPTED TO TEACH
PHARMACISTS AND PHARMACY
STUDENTS HOW TO DEVELOP
INNOVATIVE BUSINESS MODELS

12. 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
Source: (adapted) Osterwalder A, Pigneur Y. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. Hoboken, NJ.: John Wiley and Sons; 2010.

13. 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
Source: (adapted) Osterwalder A, Pigneur Y. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. Hoboken, NJ.: John Wiley and Sons; 2010.

14. 3. DESCRIBE THE ELEMENTS TO
PHARMACY BUSINESS MODELS

15. 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
Source: (adapted) Osterwalder A, Pigneur Y. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. Hoboken, NJ.: John Wiley and Sons; 2010.
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16. 1. PRIMARY CUSTOMERS
Primary customers are the
most important group of
individuals served by what
is being offered?
Physicians? Employers?
Government? New
customer? Established
customers?

17. 2. SECONDARY CUSTOMERS
These are the other customers served by
what you offer
They may be
Internal to your organization
External to your organization

18. 3. VALUE PROPOSITION
This is the
promise to
customers of the
value to be
delivered
It explains in a
compelling and
clear manner why
customers should
choose you over
competing options

19. 4. PARTNERS
With whom will you partner to serve customers?
Will you work with other health care professionals,
local businesses, insurers?
Inside the organization
Outside of the organization

20. 5. COMPETITORS
Who will be your current & potential competitors?
If they aren't partnering with you, individuals and
organizations may be competing with you.
Intra type competitors – offer same or similar
services to your pharmacy
Intertype competitors - provide distinctly
different products and services that meet similar
customer needs & wants you plan to serve

21. 6. YOUR ORGANIZATION’S OPERATION
1. Tangibles - Location, facilities, and brief
description of other products & services
provided
2. Mission and Values - Mission of the
organization & the values that are important in
making choices (e.g., patient-oriented, profit
driven, community-oriented)
3. Team - Key members of the team who are
planning & providing the service

22. 7. STRENGTHS AND WEAKNESSES
What unique strengths
does your organization
have that gives you a
competitive
advantage over other
options in the health
care marketplace?
What weaknesses give
you a disadvantage? “Marketing of Health Promotion Programs/Activities.” Pharmacotherapy Self-Assessment
Program (PSAP) – Sixth Edition. Lenexa, KS: ACCP. 2008.

23. 8. OPPORTUNITIES AND THREATS
What opportunities
(that your service
could meet) are in the
current marketplace?
What are potential
threats to the success
to your service?
“Marketing of Health Promotion Programs/Activities.” Pharmacotherapy Self-Assessment
Program (PSAP) – Sixth Edition. Lenexa, KS: ACCP. 2008.

24. 9. COSTS
What are the major costs of the service being
provided?
Startup Costs
Operating Costs
Fixed
Variable

25. 10. PRICING & REIMBURSEMENT
How does the business receive revenue for the
service being provided?
What will be the price for each unit of service
provided?
Who will pay for the service?

26. 11. COMMUNICATION PLAN
How will you
communicate your
value proposition to
customers?
What messages will
you communicate?
What do you want
to achieve with your
communications?

27. 12. IMPLEMENTATION PLAN
What things do you, the customer, and the
payer need to do to make the service a
success?
What are the most important things your
organization needs to do to successfully
implement the program?
How will you know if you are successful or
not?

28. SUMMARY
Planning is essential to prepare for
success
Plans themselves are meaningless
unless they are used to achieve the
organization’s mission
Models need to evolve as they are tested
in real marketplace conditions