Chennai: Online pharma companies in the country are expected to grow to the tune of $2.7 billion by 2023 from about $360 million at present, said a report.
According to a new EY report ‘E-pharma: Delivering Healthier Outcomes’, the key growth drivers for e-pharma market is the increase in Internet penetration and smartphone ownership along with the ease of ordering medications through an e-commerce platform.
Other factors include increase in chronic diseases, rising per capita income and resultant healthcare spend.
E-pharma presents a total addressable market size of $9.3 billion as of this year and is estimated to grow at a CAGR of 18.1 per cent to reach $18.1 billion by 2023, said the report.
Nearly, 35 per cent of the domestic pharmaceutical market relates to chronic medications and the remaining 65 per cent to acute medicines. Out of this, e-pharmacies are expected to target 85 per cent of the chronic market and 40 per cent of the acute medicine market (up from 25 per cent currently) by 2023.
“This expected rise in the acute target market by e-pharmacies, can be attributed to an improvement in last mile logistics through collaboration with local pharmacies and integrating into existing hyperlocal models,” the report said.
The report also found out that the cash burn in the e-pharma industry is common because the discounts (up to 35 per cent for some) exceed the margins in the chain (about 30-32 per cent).
Profitability cannot be achieved only by operational efficiency and lowering of delivery costs; discounts have to come down to reasonable levels to achieve breakeven and any meaningful profitability, the report said.
Another major issue with the online pharmaceutical sector is compliance, it noted. Online players only dispense medicines after they verify the prescription. E-pharma companies are likely to be more compliant than their traditional counterparts, who refrain from keeping records of any sort.
“Today, India is adapting to e-commerce rapidly with mobile-first consumer behavior and improving digital payments infrastructure, and online pharmacies, one of the verticals of e-commerce, are starting to gain momentum and have tremendous growth potential. The e-pharmacy market is expected to grow at a substantial pace in the next four years on the back of the renewed focus of the government and households on healthcare spending and the faster adoption of the internet amongst users. It will not only create value for the customers but also generate a host of B2B opportunities going forward,” said partner and national leader – E-Commerce and Consumer Internet at EY India, Ankur Pahwa.