E-medicine business:

Discussion:
 Check for medicine reminder feature??
 hybrid models and could partner further with offline pharmacies and pharmaceutical manufacturers to avail
the benefits of both the worlds- offline and online and will be able to expand their product portfolio to
other segments as well to increase their revenue generation capability and to offer a one stop solution to
every healthcare needs of the consumers.
 Feature of E-prescribing
 Benefit of medical history stored on the app

1. In the March 2020 quarter, while the hospital business performance growth was subdued at 4.0% year
on year, pharmacy business grew at a strong ~33.0%. On the business front, the e-pharmacy sector is
expected to grow at an exponential CAGR of 63.0% in the next 2-3 years and has currently ~30,000
skilled professionals employed in the space. 
Problem: Unclear Regulations on E-Pharmacies Might Hinder Future Investments
the lack of clear regulations by the government is causing anxiety among the stakeholders.
Analysts at Ken Research in their latest publication "India E-Pharmacy Competition Benchmarking – A Detailed
Analysis of Major E-Pharmacy Players in India"  -  create a sustainable all in one online platform catering across
India, which will promote the growth of the sector in a more structural & organized way by increasing the reach of
the platform.
The India E-Pharmacy Industry is currently in its nascent stage & is expected to grow exponentially with an influx
of investment in this space.
Link 1 - https://www.einnews.com/pr_news/522096442/india-e-pharmacy-industry-competition-benchmarking-
market-report-a-detailed-analysis-of-e-pharmacy-players-in-india
2. The Indian pharmaceuticals market is the third largest in terms of volume and 13th largest in terms
of value, globally. The growth in this space will be primarily driven by the high burden of disease, good
economic growth leading to higher disposable income, improvements in healthcare infrastructure &
improved healthcare financing, to name a few. India is expected to be among the top three
pharmaceutical markets by incremental growth and the sixth largest market globally in absolute size by the
end of 2020. Online pharmacies account for 1.5-3% of the total pharmacy sales in India. The country
has over 502 million smartphone users and 653 million mobile broadband subscribers.
 It is expected that the E-Pharmacy model could account for 15%-20% of the total pharma sales in India
over next 10 years, largely by enhancing adherence and access to medicines for a majority of the under-served
population.
Comp overview:
 The industry majors such as Medlife, Netmeds, Pharmeasy & 1 MG are seeing surge in their number of orders
each month and are looking forward to expand their distribution reach further to Tier 2 & Tier-3 cities and rural
regions as well. Medlife and Pharmeasy have the widest reach amongst all the e-pharmacy players, delivering
medicines to approx 25,000+ pin codes across the country. Netmeds supplies drugs to all major cities in India with
presence in approx 19,000+ pin codes as of FY’2020.
The major parameters of competition are the product portfolio of companies along with various value added
services & discount option offered by various players. players are allocating high portion of their total expenses to
marketing activities. Advertising is mainly done through digital media platforms such as Whatsapp, Facebook,
Instagram and other social media platforms. Many players are also offering discounts in the range of 15-70% to
attract more and more consumers on their platforms.
Link 2- https://www.kenresearch.com/healthcare/pharmaceuticals/india-e-pharmacy-competition-
benchmarking/345912-91.html
3. E-prescribing or electronic prescribing is a new technologic infrastructure that helps the medical
professionals to write and send prescriptions directly to the pharmacy.
 CAGR of 21.0% during 2019 to 2026.

4. Among the several segments of e-commerce, one that remains widely untapped with tremendous potential
in the future is the online pharmacy market or E-Pharmacy. India currently has over 850,000 independent
 pharmacy retail stores that are able to meet only 60% of the total domestic therapeutic demand. These
traditional Brick and Mortal Retail pharmacies are currently responsible for 99% of the pharmaceutical
sales annually with online pharmacy contributing to only 1% of the total therapeutic sales.
The Indian E - pharmacy market growth is fuelled by the rise in the number of Indian population
suffering from chronic clinical indications like diabetes, hypertension, Asthma and Obesity, leading to an
increased demand for therapeutics. Further, government initiatives and programmes such as the
digital India, Jan Aushadhi programmes for promotion of generic medicines, telemedicine and E -
healthcare initiatives to provide quality healthcare and medications to rural parts of India (Where more than
60% of the Indian population Resides ).  e- pharmacy segment -  CAGR of over 20%, crossing the US$ 3
Billion mark by 2024.

Link4 - https://www.prnewswire.com/news-releases/india-e-pharmacy-market-opportunity-outlook-2024-e-
healthcare--digital-india-initiatives-by-the-government-300652612.html

5. Experts indicate that the number is bound to show a multifold increase in coming years due to degrading
environmental conditions and unhealthy lifestyle and diet of Indians. With the increase in digital
literacy in India, it is evident that opportunities in the e-commerce industry are at its peak.
Link - https://www.researchandmarkets.com/reports/5137332/india-e-pharmacy-market-opportunity-
outlook-2025?w=5&utm_source=CI&utm_medium=PressRelease&utm_code=mplbjp
6. The utilisation of e-pharmacies by patients is on the rise due to the benefits of privacy and ease. The
competitive advantage when analysed from Porter's Model indicates that the cost leadership and
differentiation strategies have been adopted by the e-pharmacies instead of focus strategies. The
domestic network includes 3,000 drug companies and more than 10,500 manufacturing units (Indian
Brand Equity Foundation, 2020).
The e-commerce industry too contributed to the growth of e-pharmacy as it plays the role of the platform
with wide choices for consumers and improved reach of sellers. The Indian e-pharmacy or online
pharmacy market follows three different types of business models:
1. inventory led hybrid model (online/offline) - The inventory-led hybrid model of epharmacy is where
the company owns the inventory of drugs and other multiple sellers are also included on the platform
and the buyer is free to choose.
2. franchise led hybrid model (online/offline) - the company has brick and mortar franchise stores and
also sells online
3. marketplace. Marketplace model or platform model is where a zero-inventory model is followed and
the e-pharmacy company works as a platform for buyers and sellers. (Financial Express, 2020).
However, in 2019, the health ministry has revised the draft for regulating the epharmacies and said that
they cannot stock the drugs and have to operate through the retail chain of chemists, although, the
approval of the draft is still in process (Abrar, 2020).
Strategies:
1. Cost leadership is a broad scope strategy that consists of a focus on low costs, economies of scale,
technology and, preferential access to raw material.
2. Differentiation: which emphasizes uniqueness in the services or the product.
3. "Focus" which is a narrow strategy, in which the organisation concentrates on a narrow or targeted
segment. The cost focus strategy applies the concept of cost advantage and the differentiation focus
strategy emphasises differentiation in the targeted segment to exploit the special need of the buyer.
So, organisation has to identify the “Economic Moat”, a term introduced by Warren Buffet,
which refers to the continuing competitive advantage strategy based on which the organisation
will defend its position in the marketplace.
Moreover, under broader strategies, e-pharmacies work on cost leadership instead of differentiation,
as medicines are not differentiated products and generic medicines are also available in the market. The
product sold by online pharmacies is also not differentiated as the same product is accessible in the
conventional pharmacy and due to some legal constraints, the online pharmacies in India are not
allowed to sell special types of drugs mentioned above. e-pharmacies have differentiation services as
the online services provided by them are different from physical pharmacies due to ease of the
internet. So, the competitive advantages experienced by e-pharmacy under cost leadership and
differentiation strategies are numerous.
The online pharmacies work on the inventory-based business model or platform-based business
model due to which the operational cost which includes the capital for brick and mortar setup, the rent,
the qualified employees, workplace equipment, local marketing are not incurred or incurred on a low
scale. the online services provided by e-pharmacies reduce the transaction time per customer, which
finally reduces the cost. Secondly, online pharmacies operate on a large scale when compared to one
local pharmacy in our area. They also secure venture capital and funding on the regular basis due to which
they extensively market themselves and also sell the medicines at discounted rates, the fashion
followed by all the e-commerce websites. The funds also help them with releasing various schemes such as
free delivery or discounted medical testing. Thirdly, the marketing strategies of the online pharmacy
focus on the large customer base, regardless of the geographical boundaries. the economies of scale
achieved by these online pharmacies due to their large customer base are one of the competitive
advantages they experience over the brick and mortar system. the online pharmacies provide additional
services such as reliable diagnostic services, information about the medicines such as usage, side
effects, precautions, and warning. E-pharmacies also provide the services of consulting registered doctors
online with minimum fees.
differentiation strategies. Online transactions and orders provide them with the advantage of gathering
data. The data can later be used for data analytics, which supports the marketing of the online services.
 The available data can be advantageous for regular updates to the customer for ordering medicines, the
stocking of the medicines which are in demand and, the development of a predictive algorithm for future
use. The promotion of the digital health system by the Indian Government in which delivery of
services and education through online mode is the principal concept will be proved as a competitive
advantage too. The low presence of doctors and pharmacies in the rural and semi-urban area with the
promotion of digital health system will direct a path towards online pharmacies and online consultation
with doctors.
The combination of competitive advantages experienced by the online pharmacy can result in an economic
moat and it indicates sustainability in the long run. The advantage of lower-cost due to online operations,
the wider geographical reach, the 2-sided marketplace network (the increase in patients lead to an increase
in pharmacies) effect can later result in economies of scale and could be proved as the economic moats of
the online pharmacies as these are the key competitive advantage.
POTENTIAL COMPETITION ISSUES IN E-PHARMACY MARKET
The e-pharmacy market in India is a growing market and expected to penetrate 70 million households in
India by 2025 (Sharma, 2020).
The merger and acquisition phase in the e-pharmacy has started with 1. Medlife acquiring Myra
2. Reliance acquiring a majority stake in Netmeds and
3. the approval of the merger of Medlife with rival Pharmeasy by the Competition Commission of India
(“CCI”) (S.H. & Bhalla, 2020).
Amazon has also launched Amazon pharmacy to mark its entry into online medicine. Flipkart too
partnered with 1mg to enter the market and reap the benefits of early entry with an existing presence
(Healthcare executive, 2020).
Issues which were highlighted were biased search results based on commission rates, deep discounting,
data masking by aggregators from sellers, platform price parity clause, and exclusive agreement
(Competition Commission of India, 2020).
Link - https://www.ijlmh.com/wp-content/uploads/Competitive-Advantages-and-Competition-Issues-
Analysis-of-E-Pharmacy-Market-in-India.pdf

7. TELECONSULTATION - MARKET SIZE

Teleconsultation’s market size in India in the next five years at a CAGR of 48%.
June 2020 report:
1. increase in telemedicine consultations by 500% since March 2020.
2. In-person doctor visits dipped by 67%
3. 80% patients, who accessed telemedicine, were first-time users of which, 44% were from non-metro
cities
4. Patients consulted their doctors through telemedicine twice a month.
EY - 70-80% participants/respondents—who were interviewed—said that they would prefer
teleconsultation from a safety perspective, while 60% are driven by the convenience.

Competitors:

1. Practo: Founded in May 2008, Practo is the oldest telemedicine company in India. The Practo
platform facilitates medical appointment bookings for doctors/hospitals and insurance claims; aids
in storing health records and delivering medicines-all through its mobile application and website.
Practo has presence in >15 countries and houses ~2 lakh doctors, with 50 million
appointments every year. These doctors are verified through their medical licences, qualification
and specialisation; are required to follow the HIPAA compliance to maintain the patient’s privacy
and confidentiality. In August 2020, Practo launched a TVC campaign ‘#HelloDoctor’ to
encourage users to seek an expert’s advice through video calling. This 10-week campaign was
 powered by six films in seven different languages and covered 13,000+ spots across 100+ channels
including TV & digital media (YouTube, Facebook, Instagram and Twitter) in the country.

2. 1mg Founded in 2015, 1mg is an online medicine provider, which offers validated information on
medicines and assists users to effectively and safely avail medicines. The platform delivers
medicines and other health products at home in 1000+ cities across India from licenced
pharmacies. It also offers home lab tests and telemedicine services. Due to its brand recognition
as a trusted online pharmacy provider, it was easy for the co. to penetrate into telemedicine services.
It provides unlimited and free consultation with verified doctors within 30 minutes. Since the
company started practicing telemedicine on the platform, it has completed 30 lakh consultations
and comprises 20 verified doctors.

3. Lybrate Founded in 2013, Lybrate was India’s first mobile healthcare communication and
delivery platform. It provides a wide range of services to both patients and doctors. On this
platform, patients can ask queries for free or consult doctors by making online payments. The
platform helps doctors enhance their practice by having access to numerous patients. Lybrate
also allows doctors to manage their patient’s information from different clinics with an online multi-
specialty telemedicine platform. It has >90,000 verified doctors on the platform.

4. MeraDoctor Launched in 2011, MeraDoctor is a platform that offers live chat consultation with
doctors. The app provides medical advice from licenced, validated and trained doctors. 7 The
model has a patient-friendly interface as it enables the patient to have a live chat with the
doctor. The app maintains the patient’s medical records for future references, but also includes a
feature to delete the information so as to prevent data theft.

8. Diagnostic Centre: https://www.edelweiss.in/ewwebimages/WebFiles/Research/a8b96f38-8192-4fc1-

8bf8-de1b28d900f2.pdf

Date: 25th August 2020

The diagnostic industry grow at a compounded annual growth rate (CAGR) of ~10% over the next 5 years.
The Indian diagnostic industry is highly fragmented and under-penetrated despite the presence of over 1
lakh labs. Diagnostic chains command ~16% market share. The 4 major players – Dr Lal PathLabs
(DLPL), Metropolis Healthcare (METROHL), SRL Diagnostics (SRL) and Thyrocare Technologies –
have a share of ~6%. So, there is a huge opportunity for national players to consolidate and for organic
expansion.
The industry is broadly segregated into pathology testing and imaging diagnostic services. , the pathology
segment contributes ~58% of total market revenue.

Exhibit 20,21 – look

Diagnostic players continuously see minimum price increases of 0.3% to 0.5% per annum to cover
medical cost inflation.
As per various industry estimates, ~20% of total diagnostic services are being reimbursed via insurance
claims, the rest is met by out of pocket expense. This is resulting in a significant section of the population
opting for cheaper alternatives.

1. Metropolis Healthcare (METROHL):

e largest diagnostic chains in western India, with the region accounting for over 50% of total sales. the company
works on an asset-light model and earns a Return on Capital Employed (RoCE) of ~40%. Going forward, the
challenges will be in retaining its patient service centres and expanding into other regions. METROHL has one of the
highest revenue contributions (56%) from the B2B segment (SRL Diagnostics: 43% and Dr Lal PathLabs: 33%). This
is also reflected in its test mix, with specialised tests contributing 37% of revenue versus ~30% for DLPL. At
present, 66% of its collection centres are third-party.

2. Dr Lal PathLabs Ltd:

Dr Lal PathLabs (DLPL) is one of India’s premier diagnostic players that has a heavy business-toconsumer (B2C)
presence. DLPL’s country-wide network comprises a national reference laboratory in New Delhi, supported by
216 clinical laboratories, ~3,095 patient service centres and over 6,995 pickup points. Initiatives like bundled
test packages under ‘SwasthFit’ and targeted offerings like ‘Sugar and Me’ are also offered. The popularity of
such offerings are growing as they provide greater value to patients, thereby leading to higher sampling. DLPL is
the market leader in the north and because of its strong brand recognition, its services are priced at a
premium of ~20%. %. Over the last few years, it has not initiated any price hikes (growth by vlume). Its growth
strategy in central, eastern and western regions have been primarily pricing led. It has been charging ~20%
lower rates than that charged in north India to capture market share and increase brand recognition
3. Apollo
4. Doctor C