PlanetRx Strikes Online Pharmacy Deal With AOL

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At least one of the handful of emerging e-commerce pharmacy companies saw its dream of becoming a functional entity come closer to reality this month, as PlanetRx, South San Francisco, agreed to pay America Online $15 million to be featured on AOL's Health and Women's channels for the next three years.


By partnering with AOL, Dulles, VA, which has 15 million users, PlanetRx hopes to make its Internet presence stand out in a growing field of virtual pharmacies. The agreement will let consumers link directly to the PlanetRx Web site, which will be located at www.planetrx.com, from AOL's health-information areas. In addition, PlanetRx will be featured prominently on AOL's Web site at www.aol.com and on its Digital Cities sites.


Consumers will be able to order a variety of health and beauty products from the PlanetRx site, including prescription drugs, vitamins, cosmetics and toiletries and will have access to information about drugs and the illnesses they treat. PlanetRx also plans to create online discussion areas where consumers can discuss health issues.


"The founding of this company was really about health care," said Stephanie Schear, vice president of business development at PlanetRx and one of the company's co-founders. "We really want to offer consumers a fully integrated service combining both information and commerce."


PlanetRx will be America Online's first partner to offer prescription medications, but it will operate in an increasingly crowded niche as several Internet pharmacies seek to carve a slice of the $87 billion annual U.S. market for prescription drugs. Preparing to compete with PlanetRx, which Schear said was expected to launch in the next few weeks, is Drugstore.com Inc., a Redmond, WA-based firm headed by Microsoft veteran Peter Neupert and backed with venture capital from Kleiner Perkins Caufield & Byer, which helped launch e-commerce titan Amazon.com.


Soma Corp., Seattle, operator of the www.somahealth.com Web site, also is planning a first-quarter launch. The company is expected to announce a marketing agreement with "an important Internet site" within weeks and is planning a multimillion-dollar ad campaign, using both mass marketing and target marketing methods from agency Goldberg Moser O'Neill, San Francisco, to promote the site as soon as it is launched, according to Mike Hartmann, vice president of marketing.


"We believe there is a large group of consumers that is interested in getting their prescriptions this way," he said.


Although the plans for the sites have been in the works for months, the companies have been slowed by the complexity of the regulatory environment, among other factors.


"Pharmacy is not an easy-entry business," said Marie Griffin, editor of Drug Store News, a business publication that covers the chain-drugstore industry. "It's not like e-commerce, which is an easy-entry business, and it's not like books."


Pharmacy not only is a highly regulated industry, she said, but it also is service-intensive and driven by the need for immediate care.


"You're not going to go online if your head is aching and your baby's screaming or if you just got back from the doctor and then wait two days to get your prescription," she said.


If virtual drugstores do catch on, however, Griffin said she expected the large national drugstore chains, which have just begun dabbling in online pharmacy, should have an edge over start-up e-commerce pharmacies because of their experience in the nuances of providing pharmaceutical care.


The Internet pharmacy companies say their sites will offer several advantages over traditional drugstores, especially for consumers with chronic medical conditions that require ongoing pharmaceutical needs, such as diabetes or high blood pressure. Internet pharmacies also are expected to use low price points as an incentive.


Debby Wilson, a spokeswoman for Drugstore.com, said the ability for consumers to shop in private from home also is expected to work in the channel's favor.


"A lot of drugstore items are very personal in nature," she said. "This will allow people to order these types of things without standing in line with 16 people watching."


PlanetRx, Drugstore.com and Soma all plan to maintain around-the-clock call centers staffed with full-time pharmacists, who will respond both to e-mail and telephone queries. Currently, all three sites have "placeholder" Web sites that offer users a place to register their e-mail addresses so they can be notified when the sites go live.
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