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Online pharmacies to grow to $3.7 billion by 2022: CLSA

October 18, 2019 05:05 PM

NEW DELHI:pharmacies are likely to grow seven times to $3.7 billion by CY22 as they aim to grab a large pie of the highly fragmented Indian market, according to a research note by foreign brokerage, CLSA.

The brick and mortar chemists have been protesting against the business models of online pharmacies and have gone on strike several times.

The Indian pharma market is valued at $20 billion and has been growing at 10-12 per cent. Continuation of current growth trends could propel the market to $35 billion by 2025, the report noted.

However, the distribution channel of the pharmacy market in India is highly unorganised and fragmented with over 80, 000 distributors and more than 0.85 million brick and mortar retail outlets allowing room for organised and online pharmacies.

According to CLSA, there are several e-pharmacies operating currently but Netmeds, Pharmeasy, Medlife and 1mg have emerged as the key players with a pan-India reach. Apollo Pharmacy with 3, 500 stores is the largest offline pharmacy and is also piloting an e-pharma portal. These companies have cumulatively raised close to $400 million since starting out.

As per Frost and Sullivan, e-pharmacy is a nascent market worth $0.5 billion, but it is expected to grow nearly 7 times at 63 per cent compounded annual growth rate (CAGR) to $3.7 billion by 2022, riding higher internet penetration.

At present, e-pharmacies largely cater to subset of the chronic market (cardiac, diabetes where drugs purchases can be planned) and their penetration of the acute market has been tough.

Deep discounting and large promotional spends have been drivers of customer acquisition and sales growth. Most e-pharmacies are burning close to Rs 70-80 million per month and this is largely being funded by private equity money, the report noted.

With draft guidelines for regulation of e-pharmacies issued, formalisation of the space on issue of final guidelines may also be an enabler for growth for these companies.

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