With lower prices and easy accessibility, online pharmacy in the past couple of years has emerged as one of the hottest segments in India. Even without final regulation on online pharmacy, the startups in the segment including, 1Mg, Pharmeasy, Medlife, Netmeds and Medplus, based on its potential growth has attracted huge inflow of funding.
Till date, 1mg, which is hailed as the poster boy of online medicine delivery, has raised $163 million. Pharmeasy, its biggest competitor, has raised $108 million. Medlife has raised an estimated $62 million from founder Tushar Kumar’s family trust. NetMeds raised nearly $99 million across 3 rounds. Medplus has raised $213 million to build a chain of offline and online pharmacies across India as per Crunchbase.
Together, all these online pharmacy players have raised a huge amount of funding promising expansion and exponential growth in future.
The lead to the next logical questions- Are these well-funded e-pharmacy firms translating raised capital into growth and better performance? What is the growth status of these firms?
Drilling down on each of the e-pharmacy firms mentioned above, Kalagato in its latest report, which covers six-month performance beginning 2019, has revealed online pharmacy growth and performance across a range of metrics.
According to the report, 1mg, which is a leadership position in the segment, has witnessed a downfall in market share and reach by install. The most-funded player in the segment saw their market share decline to 47% in June from 53% January. Though, it still commands significant lead, about 15 million installs, in comparison to its competitors. Whereas rivals Medlife and Pharmeasy saw noticeable growth in market share to 24% (7.6 million installs) and 23% (7.4 million) respectively.
Medlife emerged as huge gainer registering 8% growth in market share during the same period.
In transaction volume market share, 1mg witnessed significant downfall to 18% from 23% in the period whereas Pharmeasy maintained the lead with 29%.
In terms of average order value (AOV), Medplus led the e-pharmacy table with Rs 990 from Rs 589 in January. 1mg AOV saw Rs 120 gain to Rs 792 in June. The only player that saw a downfall in AOV is Pharmeasy, whose value per order went down to Rs 965 from Rs 1017 in January.
However, Pharmeasy replaced 1mg as a top player with the most frequency of purchase on the platform from users in a month.
The report highlight, consumers behavioural pattern showing they are spending less on non-necessary purchases. The new users on a platform not only spend less money but also spend less frequently as compared to earlier users.
And multiple cases in country’s high courts- Mumbai HC, Delhi HC, Madras HC, Calcutta HC, and Patna HC citing ban on e-pharmacy has not helped the cause.
At present, India’s drug laws from the 1940s do not allow for e-commerce in medicine sales. In December 2018, Delhi Court had banned the online sales of medicine after Madras Court ruled to ban the same. Though, Madras court vacated its order later.
The Delhi HC ban still lingers. In spite of this, the online pharmacy reportedly continues to sell medicine online with impunity.
The online pharmacy market is expected to reach $55 billion by next year, as per the India Brand Equity Foundation. At the same time, the segment is attracting new players including e-commerce, ride-hailing and food delivery giants such as Amazon, Flipkart, Ola, Swiggy and Bigbasket.