India’s top-three online pharmacies Medlife, NetMeds and 1MG grew sales three-fold in the just concluded fiscal year on strong demand in metros and smaller towns, although intense competition has meant the companies continued to burn capital.
Medlife said sales grew to nearly Rs 700 crore in FY19, and is targeting Rs 1,400-1,500 crore in the current fiscal. The company clocked Rs 90 crore sales in March alone.
NetMeds and 1MG declined to share financial figures, but said they had seen a nearly three-fold growth in sales in FY19.
“In terms of our pharmacy business, tier 2 and tier 3 towns have begun contributing to sales in a significant way now. Growth outside metros is far faster and is helping us expand our business,” said Tushar Kumar, co-founder and CEO at Medlife. “Metros still drive 70% of our sales, but next year it could be a 60:40 split between metros and smaller towns.”
According to a recent report by RedSeer Consulting, India’s top four e-pharmacies including Medlife, Netmeds, 1MG and PharmEasy contributed 90% to online drug sales. The average order value has gone up to Rs 1,200 with customers ordering on average 10 times per year.
The three firms, however, continues to burn capital as competition forces them to offer discounts to customers.
“Although the market has seen a lot of competitive intensity, media spends and discounting, at 1MG our economics have improved significantly and we’ve grown three-fold in the last year,” said Prashant Tandon, founder and CEO of 1MG.
Investors have pumped in significant capital into the nascent sector.
Medlife, which is backed by the promoter group of a large pharma company, has so far invested a little over $75 million into the company, while PharmEasy has raised $138 million, 1MG around $88 million and NetMeds around $100 million.
“Market forces will push things to stabilize, and while there’s talk of Amazon and Swiggy getting into the space, only time will tell what their strategies are going to be. At this point in time it’s just the four of us and we’re all growing quite well,” said Pradeep Dadha, founder and CEO of NetMeds.
Source: The Economic Times