Competitor Analysis: Online Medicine Space in India
Online medicine industry in India: An overview
According to an EY report, the online medicine companies in India are expected to achieve a combined market size of $2.7 billion by the year 2023
Growing internet penetration, COVID restrictions and convenience of online purchases has enabled rapid growth for major players and created space for new entrants.
Between 2014 and 2019, of the total $2 billion poured into Indian healthtech startups, more than 20% ($462 million) was invested into online pharmacy companies
The current major players in the Indian online medicine space are:
● Netmeds (acquired by RIL)
● PharmEasy (recently acquired rival Medlife)
● 1mg
PharmEasy: Overview
Background: Founded in 2014 by Dharmil Sheth and Dhaval Shah to address the growing gap between offline pharmacies and customers, unavailability of medicines and to capitalize on the growing online market in India
How it works: When a user places an order, the order is sent out to a nearby pharmacy (onboarded as partner) that scans the prescription and prepares the order. A PharmEasy delivery agent then collects the order and delivers it to the customer’s doorstep; thus providing a seamless one-stop experience for an end user.
Strategy: The company makes use of web and mobile technology, sponsored product listings and its marketplace aggregator business model to make medicine ordering a hassle-free experience for users, at discounted rates compared to offline pharmacies.
Parent company: 91Streets Media Technologies Private Limited/API Holdings
Revenue: For FY20, the company reportedly generated revenues to the tune of Rs. 637 crores, compared to Rs 340 crores in FY19
PharmEasy: Direct and indirect competition
Direct competitors: Netmeds and 1mg are the two other major players operating in the online pharmacy space, providing similar services to the same user segment. Amazon Pharmacy is a recent new entrant into the market.
Indirect competitors: Traditional brick-and-mortar pharmacies Hyperlocal players like Swiggy and Dunzo who serve a different customer segment currently, but could move into the online pharmacy vertical in the future.
Business Models: PharmEasy vs Netmeds
Shift in tactics: PharmEasy vs Netmeds
PharmEasy:
As the business began to expand and more orders were being served, PharmEasy faced an important question with regards to logistics management: To monitor workforce and track orders better, should the company continue to turn to 3rd party APIs or develop one in-house? Eventually, the company turned to Hypertrack, which enabled live monitoring of riders, verifying customer approval during delivery as well as reimbursements for riders. Using Hypertrack, the company was able to reduce return orders and manage reimbursements accurately, at a fraction of the cost. (source)
Netmeds:
COVID restrictions forced a paradigm shift for many companies, and Netmeds was no different. To reduce touchpoints with users, the company discontinued Cash on Delivery option. Netmeds also implemented “an artificial intelligence-based solution to alert against bulk-buying medicines by setting a maximum limit for an order” (source).
Strengths and Weaknesses: PharmEasy vs Netmeds
Product Benchmarking: PharmEasy vs Netmeds
PharmEasy: Likely future initiatives
Aggressive acquisitions of rival players to consolidate their spot in an extremely competitive market and to stave off the threat of greenfield expansion by major players like Amazon and Walmart.
Tie-ups with hyperlocal players like Swiggy and Dunzo to further strengthen last-mile delivery and maximize customer reach. Hyperlocal players could be a future competitor should they venture into the e-pharmacy vertical, so a close partnership with a Swiggy or a Dunzo would be a smart move.
Additional funding could be used to create physical stores/retail presence, increasing brand value and customer trust as well as loyalty.
Netmeds: Likely future initiatives
Backed by Reliance, Netmeds will likely leverage some (or all) of the 11000+ retail stores of the Indian conglomerate. A physical presence would lead to higher reach, marketing as well as cross-selling opportunities and building brand loyalty with the customer.
More than 80% of India’s population prefers using apps in their local language. To penetrate further into Tier-2, Tier-3 and Tier-4 markets, offering their mobile app in regional languages could give Netmeds a big advantage over its competitors.
Tie-ups with leading health insurance providers could also be on the cards for an e-pharmacy like Netmeds, since they already have an insight into a user’s medical history based on their purchases. A partnership with health insurance providers would bring a truly one-stop shop experience for a user in all health-related matters.
