Investors are making a beeline for some of the top players in the online pharma space, and other aggregators are watching in anticipation. But the regulatory aspects are still hazy.
The online medicine delivery sector has reached a critical phase in its evolution.With some of the leading startups like PharmEasy, 1mg, Netmeds and LifCare stealing a march over their competitors with large funding rounds. The business is highly capital intensive, with players making substantial in1vestments in marketing and discounting. In this scenario, those that win investor interest will be better prepared than competitors for the long haul.
PharmEasy has secured funding of US$ 50 million, while 1mg is on the verge of a US$ 60-80 million round. Netmeds is scouting for more funds after the recent investment of US$ 35 million. Saif Partners and Nexus Venture Partners led an investment round of US$ 11 million in LifCare.
Investors are optimistic about the sector due to the expected clarity on regulations by the end of the year. The Ministry of Health had issued draft rules on drug sales through these pharmacies in September. These pertain to mandatory registration with the Central Licensing Authority, providing all details about the portals, keeping patient data confidential and localized and prohibition of sales of narcotics, psychotropics, tranquilizers and drugs under Schedule X of Drugs and Cosmetics Rules, 1945. Notably, the draft rules also disallow advertising on any medium, be it TV, radio, print or internet.
The online pharmacy market has a potential to reach US$ 1 billion and currently garners just 1% share of overall medicine sales. Prashant Tandon, Co-founder and CEO, 1mg states,
“The pharmacy market is a significantly large opportunity with space for multiple players, different types of business models and new players. What will differentiate the winners would be the ability to understand the nuances of this space, the ability to build consumer trust and the maturity to navigate this fast emerging space with responsibility and processes that work at scale.”
Interestingly, e-commerce majors like Flipkart and Amazon, food delivery startup Swiggy and grocery startup Big Basket are also contemplating an entry into the sector. However, the regulations on the sector are still hazy, as the Delhi High Court has asked the Central Government to ban online pharmacies across India in response to a petition.