Europe’s Pharmacies, Long Protected, Face Shake-Up
Belgian entrepreneur is winning over customers, and authorities, by challenging traditional outlets for personal-care products
Few businesses capture differences between Europe and the U.S. better than the humble drugstore. Today, people on both sides of the Atlantic are wired into U.S. giants Apple, Google and Netflix, and shop at European chains such as IKEA, H&M and Zara. But when it comes to personal care, contrasts abound, giving rise to an insurgency that is out to change Europe’s drugstore sector.
In the U.S., pharmacies have retreated into back corners of what are now supermarkets that offer aisles of everything from cookies and stationery to toothpaste and bandages. Drugstore chain CVS Health Corp. recently bought insurance giant Aetna Inc. for almost $70 billion—a scenario unthinkable across the Atlantic.
European pharmacies, in contrast, are a last bastion of the continent’s market-street past. Europe’s bakeries and butchers have been decimated by hypermarkets; cafes are being squeezed by Starbucks and its clones; pubs and bars increasingly belong to multinationals. Continental drugstores have defied those trends.
In many countries, nonprescription items like aspirin and eye drops sit behind the counter alongside antibiotics. Regulations govern prices, operating hours and even the number of pharmacies. Oversight bodies in some countries trace their roots to medieval guilds.
Belgian entrepreneur Yvan Verougstraete saw in that a business ripe for upending.
“There’s been no evolution since the old times,” said Mr. Verougstraete, the founder of Medi-Market Group, which has sparked lawsuits and complaints from traditional Belgian pharmacies since its first drugstore opened in 2014. It now has more than 25 locations and has shaken the staid sector by slashing prices of nonprescription products up to 30%, advertising them and hawking them on open shelves.
The Belgian Pharmacists Association has accused Medi-Market of prioritizing profits over customer care, and the country’s Order of Pharmacists, an oversight body run by industry officials, has ruled against Medi-Market’s commercial practices.
“For sure it’s a danger—they crush prices,” said Ingrid Bracke, a third-generation pharmacist in Brussels. “We know our patients’ names and what medications they’re taking.”
But in a twist that portends change, Belgian courts and the country’s competition authority have repeatedly sided with Medi-Market against traditional pharmacists.
“The Order tried to kill the new business model,” said Veronique Thirion, prosecutor-general at the Belgian Competition Authority, who will present her case to the authority’s judges next month. “Medi-Market was so disruptive that they reacted quite aggressively.” Ms. Thirion has recommended fines.
The Order “contests the factual and legal analysis” of Ms. Thirion’s office, particularly its assertion that the Order tried to kill Medi-Market’s business model, said Bernard Pirotte, the body’s co-president, stressing that the competition authority’s judges have yet to rule on the case.
Similar disputes simmer across Europe, where business traditions protect certified professionals and skilled laborers alike. The legacy approach can involve licensing, extended apprenticeships and compulsory membership in industry associations. Advocates say the system ensures excellent service for clients and a superior quality of life for practitioners, who are shielded from cutthroat competition.
“Customers say we offer better service,” said Anis Rahmoun, owner of Berlaymont Pharmacy in Brussels, across the street from European Union headquarters. “Chains can’t offer both low prices and good service.”
Critics say tradition limits customer choice, inflates prices and constricts economic growth. The EU for years has pushed to deregulate services, which account for 70% of the bloc’s gross domestic product and 90% of its jobs, arguing that doing so could expand the bloc’s economy by almost 2%. The EU in 2010 fined France’s order of pharmacists €5 million ($5.7 million) for cartel activities in the clinical laboratory market.
In Germany, Europe’s largest economy, regulations limit competition in roughly 150 professions—not just doctors, pharmacists, lawyers and architects but also ski instructors, bakers and well-drillers.
Even in the U.S., professional certification has become a hot topic, with Washington criticizing state governments for excessive regulation. Almost one-third of U.S. jobs today require a license, compared to less than 5% in the 1950s, according to the Federal Trade Commission. While only 65 occupations are licensed in all states, more than 1,000 jobs—including florist and dog groomer—must be registered, certified or licensed in at least one state, according to the FTC.
In Belgium, as in most countries, only licensed pharmacists may dispense prescription drugs. All other drugstore items, from ibuprofen to sun screen, fall into a category known in much of Europe as parapharmaceuticals. They face less formal regulation but are governed by traditions and industry standards.
Mr. Verougstraete, a 43-year-old entrepreneur and one-time McKinsey & Co. consultant, spotted opportunity. In 2014 he founded Medi-Market, raised €4 million, bought a small pharmacy in suburban Brussels, and reopened it next to Medi-Market’s first parapharmacy, installed in a cavernous box store.
Traditional pharmacists complained about Medi-Market’s aggressive commercialism. The Order and the pharmacists’ association launched legal and disciplinary actions against the chain. Courts sided with Mr. Verougstraete and Ms. Thirion launched her probe.
Upping the stakes, Mr. Verougstraete in 2017 broke a taboo with ads targeting traditional pharmacies’ pricing—and thus their profits. The marketing triggered fresh challenges from traditional pharmacists but Belgium’s commercial court sided with Medi-Market.
The pharmacists’ association fired back with ads aimed at Medi-Market’s commercialism. Mr. Verougstraete sued. The commercial court again sided with Medi-Market and rejected the pharmacist association’s counterclaims.
“The law was with us but we weren’t sure we could win because of the traditional way of doing things,” Mr. Verougstraete said.
Today the pharmacists’ association is focused on helping members become more dynamic, said spokesman Alain Chaspierre. “We know competition is growing” from chains and online retailers, he said.
At Botanique Pharmacy, a vintage 1911 Brussels storefront lined with carved-wood shelves full of antique apothecary jars labeled in Latin, owner Pascal François has allied with two nearby pharmacies to buy in greater volume and protect profit margins. “You have to sell a lot of little boxes to pay the rent,” he said.