Despite e-pharmacies expanding at a frantic speed, it is the 850,000 brick and mortar neighborhood stores run by small entrepreneurs who dominate the Rs 1,30,506 crore Indian pharmacy landscape.
Medlife, one of India’s fastest growing e-pharmacy, adopts the Omni channel route with a plan to have more than 250 brick and mortar stories, largely through acquisitions, by the end of this year.
“We are in advance talks to acquire two offline pharmacy retail chains both having around 70-80 stores each,” said Tushar Kumar, Founder and CEO of Medlife in an interview to Moneycontrol.
Kumar didn’t disclose the size of these acquisitions, but said that it will be completed soon. One chain operates in North India, while the other is based in South India.
Medlife also got a contract to operate 21 in-house pharmacies across various Fortis hospitals. As per the contract Medlife had agreed to pay a flat fee to Fortis.
“By end of this year we expect to have around 200 high street pharmacies and around 50 hospital pharmacies,” Kumar said.
As per Frost and Sullivan, the e-pharmacy market is estimated to be about Rs 3,500 crores in 2018, and is expected to grow at 63 percent annually to reach Rs 25,000 crore by 2022. The growth is largely led by deep discounts, convenience and THE growing adoption of technology.
Medlife, for instance crossed the gross merchandising value (GMV) of Rs 1,000 crore run rate as of March 2019, and expects to achieve overall sales of 1,500 crore with a GMV rate of Rs 2000 crore by next financial year.
Medlife has a 30 percent market share of the e-pharmacy market, and expects it to have a 50 percent share of the pie in the next 2 to 3 years.
Despite e-pharmacies expanding at a frantic speed, it is the 850,000 brick and mortar neighborhood stores run by small entrepreneurs who dominate the Rs 1,30,506 crore Indian pharmacy landscape. The organised pharmacy chains have struggled to gain more than a 5 percent market share.
It is here that e-pharmacies are trying to adopt a Omnichannel or a mixed model to penetrate deeper and faster by catering to both offline and online customers.
Medlife wants use these stores as hyper-local centres for the last mile delivery of medicines.
To be sure it isn’t Medlife alone, even its competitor NetMeds is also looking to set up offline stores to cater to tier II and III markets, and established pharmacy retail chains such as Apollo and MedPlus have started selling online.
Fund raising plans
Kumar, who co-founded Medlife along with Prashant Singh in 2014, said he may look at a possible IPO
So far Medlife has been self-funded, with funds liberally infused by Kumar's family. He is the son of Prabhat Narain Singh, one of the founders of Alkem Laboratories.
Earlier this year, Kumar raised $17 million his family trust called Prasid Uno Family Trust. With the latest fund raise, the family had invested around $ 62 million into the company.
"For the the models we are pursuing, we are sufficiently capitalized. If we need further money, we would look at an IPO or a fund raise at a later date," Kumar said.
"We have a very clear path for Medlife. We understand that it takes some time. We don’t want to dilute that by going for outside money," he added.
Kumar said he will raise money from outside when the company turns profitable.
Kumar said the company expects to turn EBITDA positive in next 6-7 months.
"We have started to make money at operating level," he added.
