The total addressable medicine market for e-pharmacies in India is likely to reach $18.1 billion by 2023, driven by increasing internet penetration through smartphones, healthcare spend and rise in chronic diseases, according to a report.
As per the report 'E-pharma: Delivering Healthier Outcomes' by consultancy firm EY, the addressable medicine market for e-pharmacies in the country stands currently at $9.3 billion and is estimated to grow at a CAGR of 18.1 per cent.
The key growth drivers for e-pharma market in India are increasing internet penetration and smartphone ownership along with the ease of ordering medications through an e-commerce platform, it said.
Besides, the increase in chronic diseases, rising per capita income and resultant healthcare spend will also aid to its growth.
Commenting on the findings, EY India Partner and National Leader—E-Commerce and Consumer Internet, Ankur Pahwa said, "Today, India is adapting to e-commerce rapidly with mobile-first consumer behaviour and improving digital payments infrastructure, and online pharmacies, one of the verticals of e-commerce, are starting to gain momentum and have tremendous growth potential".
The e-pharmacy market is expected to grow at a substantial pace in the next four years on the back of the renewed focus of the government and households on healthcare spending and the faster adoption of internet amongst users, he added.
According to EY, at present 35 per cent of domestic pharmaceutical market relates to chronic medications and the remaining 65 per cent to acute medicines.
"Out of this, e-pharmacies are expected to target 85 per cent of the chronic market and 40 per cent of the acute medicine market by 2023 (up from 25 per cent in 2019)," the report said.
This expected rise in the acute target market by e-pharmacies, can be attributed to an improvement in last mile logistics through collaboration with local pharmacies and integrating into existing hyperlocal models, it added.
The report also pointed out there is a lot of cash burn in e-pharma industry, mainly for offering discounts to gain scale. Discounts have to come down to reasonable levels to achieve break-even and any meaningful profitability.
Commenting on the opportunities in the sector, Pahwa said, "In the near future, global e-commerce players will use their international experience and local omni-channel presence to make in-roads into the e-pharma segment".
Fintech and healthtech players can look to expand offerings by getting into the segment. Hyperlocal players (food tech, grocery, delivery only companies) can also add on this segment to their existing portfolio to build efficiency on the delivery side.
"Even Indian players with deep omni-channel presence especially in emerging tier 2/3 towns with growing healthcare spends can add this vertical stream and can make a deep impact in the e-pharma sector," he said.