Netmeds’ Struggle Against Rising Competition

▴ Netmeds’ Struggle Against Rising Competition
With over 4800 e-pharmacy active companies in India, will Netmed, the earliest venture of online pharmacy still survive and beat the severe competition raised by 1mg, Pharmeasy and Amazon?

Netmeds, the first to enter the Indian e-pharmacy league, has slowly worked its way into becoming India Ki Pharmacy. Netmeds journey started in 2015 with the idea coming to Pradeep Dadha. Dadha’s family had been in the pharmaceutical business since 1914 and into drug manufacturing since 1972. But seeing the utility and growth of the internet, Dadha decided to initiate online sales of his family business. The decision to penetrate the online segment was a fruitful decision. India’s medicine and drug retail market are today worth Rs 1.2 lakh crores.  

Their company was one of the most trusted names yet they faced the challenge of gaining consumer trust to shop for medicines online. At that time e-commerce and e-pharmacy were seen with relative mistrust. Slowly, the company gained trust from its consumers and soon transformed into a successful pan-India venture with over 20,000 pin codes under its belt. They now offer online purchases of prescription medicines to over 5.7 million people across 670 cities and towns of India. They source their product offering from more than 200 Indian manufacturers including household names like Sun, Cipla, Ranbaxy and more. 

The company has ventured from being an online pharmacy into a diagnostic service. It has provided expert professional advice to over 3,000,000 patients. Netmeds has over the years acquired three promising organizations. Pluss, a medicine and wellness product delivery service. JustDoc, an online doctor consultation platform and KiviHealth, a healthcare information platform. 

In August 2020, Reliance Industry Limited acquired major stakes in Netmeds worth Rs 620 crores or $83 million. Reliance will have a 60% stake in Netmeds formally known as Vitalic Health and 100 % direct equity ownership of Netmeds MarketPlace Limited, Tresara Health Private Limited and Dadha Pharma Distribution Private Limited. This deal was cemented a few days after Amazon launched its online ePharmacy in India.

In spite of these acquisitions, Netmeds has faced a series of negatives. Its total income slid down by 44% in FY20 going from Rs 13.93 crores in FY19 to Rs 7.7 crores in FY20. It also reported a negative net worth of Rs 14.2 crores with a net profit margin of -2,111%. Before Reliance acquired Netmeds, it showed a drop of 75% in revenue operations, going from Rs 19.6 crore to Rs 5 crores. In January 2021, their B2B commerce unit Netmeds MarketPlace observed a 44% drop in its total income, staying at Rs 7.7 crores from Rs 13.93 crores of FY19. 

At this moment there are more than 4800 healthcare startups across India. The healthcare market is expected to grow from the previous $ 5.2 billion in 2019 to a solid $21.3 billion in 2025. The market’s compound annual growth rate (CAGR) is 27% between 2020 till 2025. In the same period, it will become 3.2% part of the global healthcare market pie. Severe competition awaits as just 250 Indian e-pharmacies are able to corner Rs 1000 crores of the market. With Netmeds streak of negativities will it be possible for the early bird of India's online pharmacy to catch its worm, highest market share?

Tags : #netmeds #startups #healthcare #business #smitakumar #medicircle

About the Author

Priyal Shah

Priyal Shah is a graduate of Media from Mithibai College, Mumbai. She is a writer, researcher and avid reader.

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