Online pharmacies: Prescription for “healthy” growth
The pandemic – and the resulting adoption of technology – has caused a quantum shift in India’s healthcare sector, with new players vying for a share of the $2 billion healthcare technology market. of dollars. Recently, Flipkart also made a foray into the space with Health+, joining Amazon Pharmacy, Reliance Industries’ NetMeds, Tata Group’s 1mg, and Temasek-backed PharmEasy.
While the Walmart-owned platform has introduced value-added services such as teleconsultation and electronic diagnostics, other platforms are also expanding their service offerings. MediBuddy, which just secured $125m in funding, and Tata 1mg are strengthening their partner networks and have built an omnichannel presence with services that go beyond just providing medication – extending to consultations facilities, inpatient services and even establishing distribution centers in some cases.
In the world of health technologies, the online pharmacy segment was worth $700-750 million in 2021 and is expected to reach $2.1-2.5 billion by the end of 2023, according to Saumya Krishna , partner of Kearney.
Tata 1mg’s health product portfolio includes Ayurvedic and Homeopathic formulations, in addition to nutritional supplements. Since some online pharmacies are able to deliver medicines faster through incorporated local pharmacies, Deloitte India partner Antony Prashant says an expansion into higher-margin non-medicinal products like FMCG items is inevitable. , such as offline pharmacies.
Both Flipkart Health+ and Tata 1mg provide medicines and healthcare products on 20,000 PINs in the country, while MediBuddy claims to cover the majority of India’s PINs.
“Tata 1mg is strengthening its distribution center network, having opened more than 25 centers in the last few months, with the aim of maintaining its growth trajectory near or above 100% over the next few years,” says Gaurav Agarwal, co – founder, Tata 1mg. The platform processes a few million orders per month and is currently seeing a 100% revenue growth rate, he says.
MediBuddy has 90,000 doctors, 7,000 hospitals, 3,000 diagnostic centers and 2,500 partner pharmacies, and has grown by 70% since the pandemic. It serves 35,000 customers daily and plans to expand to 100,000 patients daily in the coming months. “We wanted to create an omnichannel presence for all healthcare needs; so we’ve built a strong network channel,” says Satish Kannan, co-founder and CEO of MediBuddy.
Kearney’s Krishna says there is significant potential for e-pharma platforms to expand into wellness and nutraceutical products, especially with the emergence of several online and direct-to-consumer (D2C) brands. . However, a key issue, particularly for Ayurvedic products, is that of counterfeit drugs; these companies are addressing this issue with strict certifications for partner clinics.
However, Prashant says the biggest challenge is the limited penetration beyond urban settings, due to a lack of trust and low awareness of the benefits. “Online pharmacies that follow a market model rely on incorporated pharmacies for the availability of the prescribed brand, so they have a limited margin to increase their margins, thanks to the multiple layers of the value chain”, underlines- he. While platforms following an inventory model must maintain distribution centers and must be located closer to demand centers.