Online drug store drugneed.com plans to raise $3-4 mn from Private Equity Funds

The Ahmedabad-based e-commerce initiative plans to use the funds for future expansion

Ahmedabad-based online pharmacy store drugneed.com that sells over the counter (OTC) products, is aiming to raise close to $3-4 million (around Rs 18 crore) from private equity (PE) funds in order to fund its future expansion plans.

The e-commerce portal was launched in 2012 with an initial investment of around Rs 50 lakh and has already broken even. Parth Patel, chief executive officer of drugneed.com which is owned by DF Pharmacy Ltd, a part of Kamlesh Patel promoted West Coast Pharmaceuticals claimed, "We had clocked a turnover of Rs 80 lakh in 2012-13 and are eying a turnover of Rs 1.5 crore for the current fiscal. We have already broken even.Our margins are around 20-25 per cent."

He further added that the company is in talks with a handful of PE firms and hopes to finalise the deal within the next six months.

Patel, however, did not wish to disclose what percentage of stake would be diluted saying that things were under negotiations at the moment.

Drugneed.com is already selling around 12,000 products across 18 categories including  health and beauty, wellness, herbal, ayurvedic, skin care, healthcare, vitamins, disinfectant, baby care, nutraceuticals, nutrient supplements among others.

It is working with close to 200 vendors at the moment, mainly small and medium enterprises (SMEs), and it is planning to take that up to 500 vendors by March 2014.

Around 80 per cent of sourcing is done from SMEs.

As for its expansion plans, the e-commerce portal is planning to expand its reach through a more extensive advertising and marketing campaign besides adding more vendors on board as well new products.

Drugneed.com would also need the funds for technological upgradation of its website, Patel informed. "We want to reach out to more customers as well as have more vendors across the remote corners of the country. For that we need more funds for advertising and marketing to expand our reach," Patel said adding that currently the company spends around two per cent of its revenues as marketing expenses.

Interestingly, while the venture has been incubated in Ahmedabad, close to 40 per cent of its customers are from the southern states.

"This is perhaps because in South, internet penetration levels are quite high," Patel said. The website gets around 25,000 unique visitors everyday and nutraceuticals is the highest selling segment, accounting for over 40 per cent of sales. Patel claimed that of all its customers, around 40% are repeat customers.