Online Pharmacy Competition in India: Key Players and Trends
The online pharmacy market in India is rapidly evolving, with major players and startups alike battling for dominance. In 2021, PharmEasy became India's first unicorn in the pharmacy space, while Tata acquired a majority stake in 1mg. In August 2020, Reliance took a stake in Netmeds, followed by Amazon’s entry into the market with Amazon Pharmacy. More recently, Walmart-backed Flipkart acquired SastaSundar to strengthen its foothold in the sector.
Growing Adoption of Online Channels
The COVID-19 pandemic has accelerated the adoption of digital platforms for various needs, including the purchase of medicines. In India, which was once dominated by traditional e-commerce players, specialized platforms are now gaining prominence. The pharmacy sector alone has approximately 850,000 outlets contributing to 90% of sales, according to the National Investment Promotion and Facilitation Agency.
Post-COVID Surge in Online Medicine Sales
According to FICCI, online pharmacy penetration was quite low pre-pandemic, with only 3.5 million households using these services. However, within four months of the lockdown, 9 million households had turned to online medicine stores. A report from Ernst & Young points out that the U.S. has 10 major players dominating 74% of the pharmacy market, while India remains fragmented, with organized players holding just 5-6% market share.
How Are Platforms Attracting Customers?
These platforms are enticing customers with significant discounts, often up to 15-20% on selected products. Additionally, they bundle various healthcare services, such as teleconsultations and diagnostic tests, into a single platform. For instance, PharmEasy acquired Thyrocare for ₹546 crore, allowing them to expand their footprint in healthcare diagnostics.
Hybrid Business Models
Despite being rooted in e-commerce, players like PharmEasy are establishing physical stores to cater to customers who prefer offline shopping. Meanwhile, Medplus and Apollo, originally brick-and-mortar stores, are now expanding their online presence. Having a strong physical network allows for quicker deliveries and a better understanding of local demands.
Adapting Business Models
Competition remains intense, with three primary business models in play: the marketplace model, franchise model, and stock-led model. PharmEasy, for example, operates as a broker, working with existing wholesalers and retailers. In contrast, 1mg, Netmeds, and MedPlus focus on directly sourcing from manufacturers and selling to consumers, cutting out middlemen.
The Future of Online Pharmacies in India
The sector is attracting significant investment, with players like PharmEasy, 1mg, and SastaSundar experiencing rapid growth. PharmEasy, which has already filed for an IPO, is expected to see strong market response due to its dominant position in the industry.
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