Competitive Analysis Of PharmEasy

5 min readFeb 28, 2021

Online Healthcare Sector in India

Online healthcare sector is booming in India. Some of the major players of the online pharmacy space are PharmEasy, 1mg, Netmeds.com, apollopharmacy, medplus, etc. Many big players like Amazon, Flipkart, Reliance also entered the market.

PharmEasy

PharmEasy is a pharmacy made easy. It is India’s one of the most trusted online pharmacy and medical stores offering pharmaceutical and healthcare products and diagnostic tests. Dharmil Sheth started a company called 91streets Media. He met Dr. Dhaval Shah and both ideated over the healthcare sector. In 2015, 91Streets Media launched PharmEasy to disrupt the e-pharmacies sector in India. Dharmil Sheth is serving as a CEO of the company. PharmEasy delivers medicines in 1000+ cities in India, covering 22000+ pin codes. It also offers diagnostic test services in many cities. Recently, PharmEasy acquired Medlife to become a $1Bn entity.

Competitors

Online healthcare sector is booming in India and many big players like Amazon, Flipkart, Reliance also entered the market. Amazon launched amazon pharmacy within their e-commerce website. Reliance owns majority stakes in Netmeds.com. As this sector is growing, It is becoming more of a building healthcare ecosystem than just a medicine delivery platform. On the other hand, There are startups like swiggy and dunzo who are also delivering medicines with other items in limited cities. Local pharmacies have started home delivery to compete with online players.

We will compare PharmEasy and Netmeds.com. I chose Netmeds.com because they are solving the same problem providing the similar solution for the same set of customers.

PharmEasy vs Netmeds.com :

Company Background

Business and product mix

PharmEasy and Netmeds.com both are e-pharmacies which deliver medicines and healthcare products to customers. They provide service for diagnostic tests. They have a collection of articles to spread awareness on various topics. Both have subscriptions for free delivery and other benefits. Both allow the user to refill and remind dosage.

Value-added services

PharmEasy: In-depth details of medicine. It provides information of usage, contraindications, side effects, precautions and warning, dosage beforehand. It also suggests medicines with particular molecules.
Netmeds.com: Online consultation with doctors. It connects patients with doctors and provides video consultancy.

Geographical reach

Both PharmEasy and Netmeds.com deliver online medicines pan India. Both deliver in 90%+ pin codes of India.

Shifts in the business model

Health is one of the most regulated sectors in India. When PharmEasy and Netmeds.com started, they faced many regulatory and legal challenges. To comply with this regulation, PharmEasy changed their ordering process to mandate a prescription whenever an order was being placed. It started with delivering medicines in metro cities first. Then expanded the reach to tier-II, III cities. As competition grew, It added rapid lab tests as part of their service. Netmeds.com also did the same. Netmeds.com also started an online doctors consultancy to differentiate the product.

Revenue Model

Both PharmEasy and Netmeds.com earn most of the revenue from selling medicines focused on chronic customers who make repeat purchases regularly. E-pharmacies source their medicines directly from pharmaceutical companies like Cipla, Cadila, etc and distributors cutting intermediaries. Buying medicines in bulk avail them discounts and no intermediaries allows them to pass some discounts directly to the customers. Discounts attract more and more customers. More customers means more revenue. Though you see revenue of these companies growing, their profits might not go up. Traditional pharma retailers make a good 15–20% margin on sales, e-pharmacy in India is still new and their unit economics need time to evolve.

Over the years both the companies have carried out different marketing campaigns which helped them gain new customers and retain existing customers. PharmEasy launched its famous ‘Take it easy, PharmEasy’ campaign while Netmeds.com had M. S. Dhoni as brand ambassador. Both the campaigns are very successful. According to an interview with Anand Pathak, CMO, Netmeds.com published on IMPACT, Netmeds.com saw 300%-400% uptick in brand recall because of this campaign.

Revenue Guesstimates

According to a report published by redseer in Feb 2020, e-health currently has a $11 Bn ready addressable market, out of which only ~11% has been tapped at $1.2 Bn e-health GMV. It is expected to grow to $35 Bn by FY 25, out of which, 38–55% is likely to be tapped by e-health players at $11–19 Bn annual GMV. It also mentions that currently India has 60 Mn e-health ready addressable households out of which ~4.3 Mn households are using e-health services.

Let’s Assume that 4 Mn households order an average 5 times a year with an average order value of 1000 Rs, 30% of them orders using PharmEasy and other 30% orders using Netmeds.com and both PharmEasy and Netmeds has 20% margin per order.

Revenue = avg order value * # of orders * order frequency * margin

From the above assumptions we get revenue of PharmEasy and Netmeds.com is almost 3.28 Mn per day.

Due to COVID, people were forced to stay inside. Hence ehealth saw a surge in demand in the second half of 2020. So, Actual data might be far higher than the data calculated here.

Report link: https://redseer.com/reports/indian-ehealth-at-a-tipping-point/

Strengths and Weaknesses

PharmEasy: Its strength is its loyal customer base which is growing day by day. It doesn’t provide diagnostic tests in all the cities it delivers medicine. We also see players like Practo are building the whole ecosystem around healthcare while PharmEasy is just e-pharmacy.
Netmeds.com: It’s now backed by Reliance Retail. Most of the revenue comes from prescribed medicine but also offers online consultation with doctors. It needs to work on improving user experience.

Product Comparison

Android App User Experience

PharmEasy is easy to use and provides necessary information upfront but It can still improve on areas like adding multilingual support. Netmeds.com’s app is also easy to use and has useful information upfront but the UI can still be improved.

Future Initiatives

References:

I would love to hear your thoughts and suggestions in the comments :-)