PharmEasy is an online pharmacy which aims to connect the patients to various local pharmacy stores and modernise the healthcare setup in India. It is one of the biggest e-commerce platforms in India today, and India’s No.1 healthcare aggregator. It aims to provide hassle-free delivery of medicines and other medical equipment in several cities all over India. The platform is continuously growing and expanding by building connections and acquiring its competitors to get ahead in the market. Keep reading to find out more about PharmEasy’s journey of success and its strategy to expand.
In 2019, approximately 8,50,000 pharmacy retail stores existed in India which suffice for 99% of Indian drugs and medicine sale while Online Pharmacy contributes to only 1% of total medicine sale in India. The online pharmacy is gradually increasing in size in Indian Market due to increasing digital awareness, smartphone usage and convenient payment solutions. Online pharmacy is the latest entrant in Indian e-commerce market gaining interest from both government agencies and investors. The total worth of the online pharmacy market is approx a billion dollars with assistance of 30 new start-ups in different segments and regions of India. In the year 2015, eleven initial start ups of online pharmacy formed IPA – Indian Pharmacy Association. The members of the association includes MG, Net meds, Bookmeds, mChemist, Medlife, Pharmeasy, Medidart, Medstar, Zigy, Save on medicals and Save my meds. In the last year, India has witnessed a surge in demand for COVID-19 related products, medicines and supplements which has benefited pharmacy players, especially those with online offerings.
This case study covers one of these startups- Pharmeasy which is growing into a giant in this segment.
Inception and Background
PharmEasy was founded by two Mumbaikars in 2015, Dharmil Seth and Dr. Dhaval Shah who saw a vision to make healthcare services affordable and accessible to all. They realized that there was a huge market gap in connecting patients and customers to local pharmacies via technology. They realized that even though people can buy almost anything like clothes, cosmetics, home decor, stationery, etc. There was no online platform that provided delivery of medicines. The two partners then saw a vision to create something with the help of advanced technology that would enable people to get access to medicines and medical equipment from anywhere in India easily and quickly at their doorstep. They are trying to build relationships between chemists and patients and making it innovative by understanding the needs of the patients.
What is PharmEasy and how does it work?
PharmEasy is an e-commerce platform for the purchase of medicines, medical equipment, and other healthcare-related necessities. They make the best use of mobiles, apps, and technology to ensure that people get access to the best health care products with lucrative discounts as soon as possible. Even though they offer discounts and fast delivery, they ensure that they make no compromises when it comes to the quality of service and delivery of the medicines.
To attract and gain the customer’s trust, the e-commerce platform keeps its customers well informed and provides a transparent platform to them as a way of assurance. The platform operates in the following way to ensure that the medicines and equipment provided are of good quality and reach the customer in time:
- The first step involves the customer uploading the prescription. The prescription is then verified based on a set of criteria and then it is passed along to a local partner pharmacy in the customer’s vicinity. They have partnered with several pharmacies that have certified pharmacists to review the prescription and the medicines and provide relevant and useful information about the medicines.
- Next, a delivery agent collects the prescription and the medicines after getting them validated at the store from the pharmacist based on rules and regulations. The pharmacist also contacts you if they have any queries and vice versa. The package is then dispatched for delivery after verification.
- The agent will then collect the package and deliver it to you at your doorstep completely hassle-free and as soon as possible. They also offer various payment methods like COD and through online platforms like Google Pay, Paytm, Amazon Pay, etc making it easier for the customer.
The platform operates at a hyperlocal level meaning that it partners up with local pharmacies instead of the big players in the industry to buy and deliver medicines from. This helps them uplift the local pharmacies and digitize them and create opportunities for them. They make sure that their retailers make a profit too and benefit equally from the partnership.
The customers can order from their website directly or through their mobile app. The platform offers discounts of up to 20% if the customers order through the app. The platform makes sure that it follows all the rules and regulations set by the Indian Government regarding drug policies and e-pharmacies and only provides medicines and equipment approved by them.
With this customer-focused strategy they have written their success story well and continue to climb the ladder upwards. But they have certainly faced numerous challenges and obstacles during the journey.
Challenges in the journey
Like any other e-commerce startup, PharmEasy has suffered through its own set of problems to become the large e-pharmacy it is today. The first major problem that they encountered was related to supply chain logistics. The healthcare supply chain lacks digitized records and over 80% of the pharmaceutical segment has never used computers or computerized billing. This posed problems like keeping track of products, patients, and the use of medicines. To overcome this challenge, they ensured that every retailer they work with has digital records and a proper system. They assist them to become digitized by offering inventory management and accounting tools. This helps keep a track of everything along with the manufacturer and the distributor.
The second challenge that the two-faced along their journey was the lack of support from the regulators. People fail to realize that it is very important today to introduce digital models and platforms in this sector to track the movement of products, maintain records and databases to ensure that the medicines and equipment are being used rightly. The company is continuously engaged in discussions with the regulatory bodies regarding the rules for e-commerce platforms in the healthcare sector and suggesting reforms that will benefit society.
The third major challenge was that of the customer’s mindset. During the early days, it was very difficult for the firm to gain people’s trust and assure them that the supply of medicines and equipment is coming from trusted sources. Along with changing their mindset, it was also important for them to educate people about the importance of buying only prescribed drugs and medicines. They were able to devise their business model and use various strategies to overcome these obstacles to write their success story.
Leading the way to Success
After continuous struggle and overcoming obstacles Pharmeasy has emerged as India’s No. 1 healthcare aggregator and a trusted platform to buy medicines and equipment from. The company started with only three employees and today has over 1000 employees and is moving upwards and forward. Over the past 6 years of operation, they were able to educate people and gain their trust through their strategies and transparency. This helped them gain recognition in the Indian market along with securing a majority stake in the segment.
The startup joined the unicorn club earlier this year and became the first e-pharmacy to do so with a valuation of $1.5 billion. The company continues to invest in technology and is continuously growing and expanding to achieve its aims.
Acquisitions- The game changer
The e-pharmaceutical company continues to reach new milestones this year. Earlier this year, it reached its first milestone by becoming a part of the unicorn club. Later it acquired its competitor Medlife and became the largest domestic online pharmacy company, with an ability to serve around 2 million people a month.
On June 25th, PharmEasy’s parent company API Holdings announced that it has acquired Thyrocare, a chain of diagnostic and preventive care laboratories. It is the first startup to acquire a publicly listed company in Indian Corporate history.
This shows that the company is continuously making efforts to move forward in the e-pharmaceutical sector and is strategically planning its moves for acquisitions and expansions to achieve its goals and turn its vision into reality. They have reached a level of success from which there is no turning back.
Even with strong competition in this sector, the company continues to adapt and gain advantages over the other companies in the sector.
Even though the company was one of the firsts of its kind, over the years it has faced strong competition from some companies. These include Ranger Health, Myra Medicines, Hello Heart, Netmeds, 1mg, and BrownPacket. These companies are building their own empires just like PharmEasy. But PharmEasy is ahead of them by continuously growing, expanding, and acquiring other companies. Their main competitive advantage is that the people have adapted to PharmEasy and have started to trust the company over others as it has heavily invested in educating people and gaining their trust.
The company has growing funding and is a part of the unicorn club with a valuation of about $1.5 Billion. Their latest funding size was $350 million in Series E. Their first funding was about $2 million in April of 2017. In Series C of February 2018, they raised about $30.7 million. Later that year they raised $50 million. In 2019, they raised $220 million in Series D of their funding rounds. Some of the major investors of the e-pharmaceutical platform are Bessemer Venture Partners, TPG, Eight Roads Ventures, Nandan Nilekani, JM Financial, Manipal Group, Astarc Ventures, F-Prime Capital, LGT group, Fundamentum, Eight Roads Ventures India, KB Financial Group, Think Investments, Prosus Ventures, etc.
Revenue and Valuation
The company gets its main revenue from the delivery service and by displaying the sponsored results of various pharmaceutical entities. Advertising is a major source of revenue and this e-pharmacy leverages it to its advantage. The company is currently valued at $1.5 Billion and is a part of the unicorn club.
In 2020, the e-pharmaceutical company nearly doubled its revenue to about Rs.637 crores.
What does the future look like for Pharmeasy?
After the path-breaking step of this marvelous venture, the future seems very bright. the acquisition of thyroxine, the valuation of pharmeasy doubled instantly. And, now, India’s first online pharmacy unicorn PharmEasy, is reportedly exploring options for its initial public offering (IPO) towards the end of 2021 or early next year in order to raise INR 3,000 Cr to INR 3,700 Cr ($400 Mn- $500 Mn), at a valuation of INR 21,800 Cr ($3 Bn). This is surely one of the most evolving startups among the lot.