Interview with Alex Savic, CEO of Alensa Next Widgets

Alex Savic is CEO of Alensa NextWidgets, based in Zurich, Switzerland. Alex is a repeat presenter at Health 2.0 and will be presenting an update on the NextWidgets platform at Health 2.0 Europe in Paris April 6-7, 2010. NextWidgets allows pharmacies to sell their products online directly to consumers through widgets placed on relevant content publisher websites.

Indu Subaiya: Alex, tell us a bit about yourself and our background, and what Alensa is all about.

Alex Savic: I’ve been working in the generics industry since 2000, traveling a lot to India and Eastern Europe to meet with manufacturers and inspect manufacturing facilities. Alensa was mostly in the API and finished formulations business then. So to branch out, in 2006 we started working on an e-commerce platform for pharmacies which has since evolved into the NextWidgets platform.Indu: What specific insights did you gain working in the pharmaceutical industry that led you to see the opportunity for an e-commerce platform for pharmacies?

Alex: Around 2005 we looked at the success of online pharmacies in the US and also of DocMorris in Europe and saw a potential to create a platform that would allow any pharmacy to establish themselves online and offer e-commerce to their customers. Still today, only a small fraction of pharmacies are engaged online, despite the high demand for Internet healthcare services from users.

Indu: Do you mean sites like Drugstore.com in the US?

Alex: That is definitely a good example – it was one of the case studies we looked at.

Indu: But your platform allows individual pharmacies to sell directly to consumers. Why did you take that angle?

Alex: We thought that we should create software that could empower any pharmacy owner to compete online. It’s quite a challenge for small to medium-sized pharmacies to allocate resources to an Internet project, so most of them don’t. By providing a hosted and managed platform we felt we could get more pharmacies on board. What’s interesting is that we’ve created a platform now that can be used by both large and small merchants

Indu: Tell me a little bit about the market for pharmacies in Europe. What percentage of the market is dominated by large chains and what percentage is made up of smaller, “mom and pop” operations.

Alex: It is different for each individual country but mostly it is still independently owned pharmacies that make up the majority. What I find fascinating about e-commerce is that the physical size of your chain is not as important, other competitive advantage factors come into play. I put together some stats for the pharmacy market in Europe—it’s clearly a fragmented, diverse market:

Indu: Your NextWidgets platform plays an interesting role connecting content and community sites with the drugstore vendors. Tell us how that works and how the use of widgets across a network of sites benefits both sets of parties.

Alex: NextWidgets is a shopping widget platform which means we take the pharmacy store and miniaturize it to the size of a traditional banner ad. When the ad is clicked on, it expands into a small shop where the user can make purchases without leaving the publishers page. This allows content publishers to offer products relevant to the content and earn a sales commission. It’s a really simple way for publishers to provide e-commerce functions on their site and increase engagement with visitors. On the other side, the pharmacy benefits from increased distribution.

What’s really exciting at the moment is that we’re launching the same functionality for Facebook fan pages. Many publishers have huge fan communities on Facebook and so this is an added way to generate revenue off-site.

Indu: So give me an example of a publisher, an example of a drugstore and take through how the economics works for both sides.

Alex: An example in the US is OverstockDrugstore.com from Utah. Their store can now we seen on healthworldnet.com website and the Sugarstats Facebook fan page, both branded to fit the publishers requirements.

Indu: So healthworldnet.com gets a commission each time someone makes a purchase from a widget it hosts?

Alex: Currently we are working on a commission model, where we pay any publisher a commission on each sale. This is a purely performance based model which is often a challenge since many publishers only work on a fixed price (CPM) model. In many ways it comes down to publishers requirement for e-commerce functionality, and if it’s required to make the site more interesting, then it’s a good proposition. On the Facebook side, it’s an easier proposition, there is only upside to using the widget on Facebook.

Indu: Does the content site benefit from increased traffic/search optimization because of the widget?

Alex: The widget does not offer publishers traffic/SEO benefits – it’s purely a contextual shopping functionality

Indu: So as a consumer today, what types of products can I buy through NextWidgets’s modules? Is it shampoo and razors? Or can I get chemotherapy prescriptions filled?

Alex: In the example of OverstockDrugstore.com we have some 9500 products which are currently all non-prescription. We are also planning to enable a sign-up form for a new program that OverstockDrugstore.com is launching for low-price prescription filling service for diabetics.

Indu: So how many pharmacies are now online with Alensa and how many publishers are hosting widgets? In which countries is the service available?

Alex: We currently have OverstockDrugstore.com in the US, OneClickPharmacy.co.uk in the UK, www.stauffacher-apotheke.ch in Switzerland and Apothekapharmacity.rs in Serbia. We hope to have France and Germany covered within this year. On the publisher side, we have only started the marketing effort so please stay tuned for more on that at Health 2.0 in Paris 😉 Here’s a bit more on the Facebook widget for OverstockDrugstore.com:

Indu: Are there any regulatory issues that impact ecommerce for pharmacies?

Alex: In the US there are no issues. In Europe there are some countries where online pharmacy business in not allowed such as Poland, Hungary and I believe Spain and Portugal.

Indu: Do you think those regulations will change?

Alex: Many countries in Europe have been dragging their feet about liberalizing the pharmacy market. I believe they will change but it could take years. The interesting thing is that the free trade of goods principle allows online pharmacies in countries that allow them such as the UK, to sell into the countries that don’t legally, but within those countries themselves, there cannot be any local online pharmacies. Which is a strange situation indeed. Pharmacies online still have the lowest penetration rate of any online industry

Indu: What plans are coming up for NextWidgets/Alensa?

Alex: Even the best technology is worthless if you don’t market it, which is our task for the next half of the year, with the goal to get many more merchants and especially many publishers to try the system. Of course we have to optimize the technology further as well. For example we are working hard on getting our crawler & contextual matching engine ready to demo at Health 2.0. Beyond that we look forward to officially launching the iPhone/Android version of the widget. We have a couple of more innovative ideas about how this technology can be extended which we will be ready to present next year.

Indu: Thanks very much and see you at Health 2.0 Europe , in Paris on April 6th!

Alex: Thanks, we’re looking forward to presenting.