Even as brick-and-mortar pharmacies enjoy a lion’s share of the market, online e-pharmacy is expected to grow more than four times in a couple of years, as per market research firm Redseer Consulting, latest findings. Although like any e-commerce enterprise, consumers were attracted to the online platform because of the steep discounts, now the base is growing due to convenience.
The report stated that the shift in consumer behavior can be attributed to dissatisfaction with the offline pharmacies owing to low discounts, product unavailability, and poor service levels.
“Online pharmacies have made genuine medicines accessible and available in the remotest corners of the country, at affordable prices with the convenience of improved last-mile delivery,” Anand Pathak, director, marketing, Netmeds.com, said.
According to 300 consumer surveys, 80% of the respondents’ main grievance was zero discount offered by the offline retail shops. While 38% respondents faced unavailability of medicine. Meanwhile, discounts and convenience drive the online growth at 98% and 95%, respectively.
Besides, unavailability led to 63% of the respondents migrating to online platforms, while 18% did so because of easy access to substitute medicine.
According to a recent report released by Ernst & Young (E-Pharma: Delivering Healthier Outcomes) the current size of the Indian e-pharma market is $360 million which is expected to reach $2.7 billion by 2023. However, as per Pathak, the total addressable market (TAM) for Indian e-pharmacies could potentially reach $18.1 billion by 2023 from $9.3 billion at a compound annual growth rate (CAGR) of 18.1%.
The growing size of the e-pharma market is also evident from the advertising spend of some of the e-pharma brands. MedLife, another e-pharma company, had tied up with Bollywood star Boman Irani in 2018, while Netmeds announced cricketer Mahendra Singh Dhoni as its brand ambassador. Pharmeasy, on the other hand, has been a prominent ad partner for the Cricket World Cup.
As per Pathak, currently the estimated marketing spend of an individual e-pharma company is anywhere between Rs 50 crore to Rs 150 crores, based on their marketing plans and budget.
“E-pharmacy is still a niche category. Therefore, marketing spend is required to create consumer awareness. The market today is relatively small as compared to the addressable opportunity, but the increase in penetration of internet and smartphones, convenience of buying medicines online and increase in per capita spend on chronic and acute ailments is one of the key factors for growth in the segment,” he added.
“As consumers continue to try online platforms and these online platforms improve their service levels over time, we expect to see the total as well as sticky consumer base both expand rapidly, which should enable the market to achieve aforementioned targets.” The report concluded that online platform will continue to grow with new consumers and a better service.