Offline pharmacy aggregator PharmEasy looks to raise $20 mn

Aims to grow business five fold in 6 months; current customer base of 1 lakh in seven cities

India's biggest offline pharmacy aggregator PharmEasy is looking to raise $20-25 million to expand its operations to 20 more cities by 2017 from a current seven. The start-up is also aiming to grow its business in terms of turnover and customer acquisition five times from its current turnover within the next six months.

Speaking to Business Standard, Dharmil Sheth, co-founder, PharmEasy said,"We had raised $5 million so far, partly from friends and family, and partly from institutional investors. We are currently present in seven cities, and as we plan to add another 20 cities to our operations by 2017, we would need to raise more funds, something to the tune of $20-25 million."

PharmEasy basically operates as an intermediary that helps the user identify and connect with hyperlocal pharmacies that have a valid license to sell medicines. The patient ends up saving 20 per cent on the maximum retail price of the medicine availed through any retail pharmacy aggregated by the PharmEasy app.

PharmEasy has about 20 partner vendors in a city like Mumbai. As it acts as an aggregator, it multiplies the volumes for any pharmacy it is working with, and hence they can avail higher discounts from distributors. Sheth explains that at times the discounts from distributors are in the range of 27-28 per cent. Around 20 per cent is passed on to the consumer, but the pharmacy too is able to achieve reasonable margins thanks to the volumes. At present PharmEasy charges a 1-2 per cent commission on the medicines sold, and Sheth thinks that as the volumes increase, they would be able to garner 7-8 per cent margins.

Over 120,000 families across India have used PharmEasy, and on an average about 100,000 customers shop medicines using the app every 45 days. The average ticket size is around Rs 1500, Sheth informed.

It currently delivers in Mumbai, Delhi, Pune, Kolkata, Bangalore, Jaipur and just started Ahmedabad. It plans to start operations in Hyderabad, Chennai, Kochi and Indore within this year.

Sheth also added that no medicines are delivered without valid prescriptions, and no prescription older than one year (even in case of chronic ailments like hypertension and diabetes) is accepted. "In fact, we are losing almost 45 per cent of business as we do not accept old prescriptions," Sheth added.

Close to 80-85 per cent of its sales come from chronic therapies, and as such Sheth claims that about 65 per cent of the pharma market is chronic therapies which is clocking a 8-10 per cent growth rate every year.

As an extension, PharmEasy has also launched a service for aggregating pathology laboratories for diagnostic tests, which is available only in Delhi, Mumbai and Kolkata. The app provides a 40 per cent discount on diagnostic tests availed by users. This service too would be scaled up in phases.