According to the report ‘E-pharma: Delivering Healthier Outcomes’ by EY, the e-pharmacy industry in India is poised for exponential growth. The current addressable medicine market for e-pharmacies is valued at USD 9.3 billion. With a projected CAGR of 18.1%, it is expected to reach a staggering USD 18.1 billion by 2023.
Growth Drivers and Future Projections
Several factors are contributing to the surge of e-pharmacies in India. These include increasing internet penetration, a rise in smartphone ownership, and the convenience of ordering medications online.
Further, there is a rising incidence of chronic diseases in India and a corresponding increase in per capita income and healthcare spending. Currently, 35% of the domestic pharmaceutical market caters to chronic medications and the remaining 65% to acute medicines. By 2023, e-pharmacies are projected to capture 85% of the chronic market and 40% of the acute medicine market—up from 25% in 2019.
Improved last-mile logistics due to collaboration with local pharmacies and integration into existing hyperlocal models will also contribute to this growth.
Financial Fluidity and Opportunities
One significant challenge for the e-pharmacy industry is financial sustainability. To gain scalability, companies have been offering heavy discounts, resulting in substantial cash burn. To achieve break-even and meaningful profitability, these discounts need to be significantly reduced.
Despite the challenges, there are opportunities for fintech and healthtech players to expand their offerings by entering the e-pharmacy segment. Hyperlocal players like food tech, grocery, and delivery only companies can also include this segment in their portfolio for more efficient delivery.
Regulations and Guidelines for E-pharmacies
In 2018, the Government proposed several rules and guidelines for e-pharmacies. These rules require e-pharmacies to register with a central authority and restrict them from selling certain categories of drugs. Other guidelines pertain to customer support, data privacy, and periodic inspection.
| Regulations | Explanation |
|---|---|
| Mandatory registration | E-pharmacies need to register with a central authority. |
| Data localization | Companies must keep the data localized and cannot store it on international servers. |
| Non-disclosure of customer information | Information received from customers should not be disclosed for other purposes or to any other person. |
| Advertising restriction | E-pharmacies are prohibited from advertising any drug on various media platforms. |
The Hyperlocal Model in E-Pharmacy Industry
The term ‘hyperlocal’ refers to a small area or a very specific demographic. In the context of e-pharmacies, a hyperlocal model involves providing products or services within a specific geographical area.
The functioning of this model revolves around an aggregator that drives the system and earns a commission. This model is applied to both products and services and can be seen in businesses like UberEATS, Zomato, BigBasket, and Postmates.
Emerging tier 2/3 towns in India, with growing healthcare spends and deep omni-channel presence, offer significant potential for growth and impact in the e-pharmacy sector. The future of e-pharmacies in India, therefore, looks promising amid increasing digitalization and evolving consumer behavior.