Golden opportunities in European online healthcare

The consumer healthcare market in the US will be worth $205.2bn by 2003, according to Jupiter Communications. With technology becoming an increasingly integral part of the doctor's armoury, the future for suppliers in the online part of that market looks rosy. But how exactly will it shape up in Europe?

Recent developments in the US have been explosive. Healtheon, whose main product is a service that allows doctors to submit claims to insurance companies through a Web site, has bought WebMD, a consumer healthcare portal, for almost $10bn. Microsoft has invested $250m in the new company. The deal, based on a stock swap, went through on 20 May.

Just seven days later, Fox Entertainment got in on the healthcare act. The Murdoch company announced the launch of the Health Network, which will provide information for doctors, hospitals and consumers. The company will target its installed base of cable subscribers to help boost traffic on its various Web sites. One will offer medical training aimed at doctors, another will provide information for hospitals; there will be various other health and fitness sites for consumers.

The Jupiter Communications report predicted that the consumer online healthcare market will be worth $1.7bn by 2003. The research divided the market into four sections: prescription pharmaceuticals, over-the-counter drugs, "neutraceuticals" (vitamins and food supplements) and personal care products. The lion's share of predicted spending will go into the prescription drugs market - $966m.

The clearest difference between the States and Europe is that US companies can sell prescription drugs over the Web. But the market here and in the States is also buoyed by sales of vitamins, hygiene products, alternative remedies and holiday products like sunscreen and baby care goods.

The revenue split for a traditional pharmacist is divided half-and-half between pharmaceutical products and off-the-shelf products. As the regulatory and trust issues concerning buying prescription drugs over the Web are overcome, so the revenue model will reflect this.

For any company thinking of getting involved, it is the perfect ecommerce model: there are products to sell and an audience that wants lots of regularly updated information about those products. Online services are also discrete: buying cream for your piles is not something most of us would relish doing in public, so the anonymity of ecommerce is a benefit rather than a hindrance. Repeat sales for products like contact lens solution or vitamins all lend themselves perfectly to remote purchasing.

Although many see the European online healthcare market as a sleeping giant awaiting approval from various regulatory bodies, in truth the market opportunity has already arrived. The early use of the Internet for researching medical information with which to confound your doctor has helped boost the growth of healthcare sites of all descriptions.

Waiting for the regulators might just be too late. There is more than enough room in the market to create a couple of big European names.