For decades, the Indian Pharmaceutical distribution is driven by the Wholesale and Retail Pharma distributors and dealers. With the onset of Digital Pharma, this equation is expected to change. There will be no apprehension about the relevance of companies like 1mg and Netmeds. But, the impact of their success will be measured based on the value proportion they offer to the retail customers and pharmaceutical manufacturers. In other words, can these companies accelerate demand for the pharmaceutical products or take business away from the retailers? What is the business model they are adopting which will create advantage for the patients? Will they improve access in any different way? It could be merely some change in such a way that the existing business would only get realigned between the retail and digital pharma.
Over Half a decade in business – What did 1mg and Netmeds achieve?
FY 2020 revenue numbers can serve as the reference point to figure out how Online Pharma fared. Both 1mg and Netmeds were founded in the year 2015. Both these players are now backed by major Indian corporate houses. Netmeds had the advantage of Reliance at an early stage. But, 1mg had successful run with investors. Going by the 2020 revenue numbers, 1mg crossed 350 Cr where as Netmeds registered 7.7 Cr, a 44% decline from the FY19. The net worth of 1mg in FY20 was negative Rs 883 Cr while Netmeds reported a negative net worth of 14.2 Cr. Clearly 1mg took a great leap in terms of revenue growth and market share when compared with Netmeds. However, the recent developments of Netmeds aligning with Reliance and 1mg aligning with Tata would create a new arena of competition and battle space between the giants. This space would be interesting to watch in the next decade.
What patients get from Online or Digital Pharma determines the future
Whatever the Online Pharma has achieved so far is a minute micro fraction of retail pharma market size that is estimated to be 25 Billion USD. There will certainly no question of Online Pharma either competing with or replacing the retail businesses in the industry, anytime in the near future. However, the opportunities are huge and plenty. The key question would remain if the new composition of Digital Pharma companies can align themselves with what the patients in general would be interested in.
Some of the conventional Pharmacy chains in India are falling out of customers’ preference because of two reasons. One, they are becoming a lot more like a retail store, selling FMCG products rather than providing relevant options for drugs and medical products. Two, the customers often don’t get the brand they ask for. The branded retail pharmacy stores that don’t offer variety are less preferred by those who care for their preferred brand of drug. In many cases, unbranded retail medical shops are still favoured by many patients because of familiarity and personalized experience. If Online Pharma also follows the same pattern of selling tooth pastes and shaving creams instead of giving more options for patients with multiple brands, they stare at a very bleak future.
