New-age pharmacy start-ups tap 'kirana' networks, eye US market

New entrants in the largely unorganised Indian pharmaceuticals market are trying out innovative ways to tap a vast market that lies in hinterland

New-age pharmacy start-ups are trying to disrupt the unorganised sector by not only going digital, but also tapping into kirana networks to go micro-local. They are even setting their sights on the unorganised pharmacy retail market in the US.
 
India has close to 800,000 retail pharmacies, one of the largest in the world, but only 40 of these are in the top 20 cities. New entrants in the largely unorganised Indian pharmaceuticals market are trying out innovative ways to tap a vast market that lies in the hinterland.
 
According to the Economic Survey 2021, India’s pharma market is expected to grow three times in the next decade. From $42 billion in 2021 (including exp­orts), it is likely to reach $65 billion by 2024 and further expand to $120-130 billion by 2030.
 
Players like Rajasthan-based Dawaa Dost, backed by Singapore Angel Network, are trying to tap the vast kirana stores network in the country. “We wanted to be within five minutes of every Indian, and we thought that is possible only if we leverage the vast kirana stores network. We wanted to be in the micro-vicinity of the customer,” said Amit Choudhury, chief executive officer (CEO) of Dawaa Dost, an omni-channel pharmacy platform. Arou­nd 2,500 kirana stores have been on-boarded so far around Jaipur. “We take orders from the kirana stores using our tech platform and then these orders are fulfilled by our stores,” Choudhury said.
 
One Dawaa Dost pharmacy store would have around 100 feeder kirana stores that would generate the order. “We now have 35 per cent productivity from our kirana  stores. This means, 35 per cent of the stores have given us orders in any given month. We want to take this up to 66 per cent,” he added. The start-up is also targeting a network of 15,000 kirana stores in a year’s time or so.
 
The start-up, which sells over 70,000 generic medicines on its platform, has recorded over 12X growth in the last 12 months. Being closer to the consumer, especially in rural areas, is what Cho­udhury is banking on.

Another start-up MedleyMed is setting its sights on the global arena. M Satish, managing director (MD), Athena Global Technologies and Medl­eyMed, is not beta-testing entry into the US market. Unlike India, 85 per cent of the US market is organised. Satish said the unorganised 15 per cent of the pharmacy market is serviced by around 5,000 retail stores. MedleyMed is trying to on-board small and mid-sized wholesalers as well as retailers.
 
Satish said, “These stores address a market size of $55-60 billion, and this is a sizeable market. We want to tap this market. Moreover, we would eventually app­roach Indian generic pharma players, who supply to the US market so that they can tap this segment of the pharmacy market.”
 
MedleyMed also has an India business where it offers telemedicine and supplies drugs to retail pharmacies, among others. “We are helping retail pharmacies source medicines at reasonable prices, and also offering an e-pharmacy option to the stan­dalone retailer through our platform,” Satish said. Standalone retail pharmacies can also opt for MedleyMed branding, and thus, MedleyMed aims to create a network of such franchise stores. By 2023, Satish added it aims to on-board 400 pharma­cies in the country. India’s largest organi­sed pharmacy network Apollo Phar­macy has over 3,500 stores across the country.
 
Ankur Agarwal, founder and director of pharmacy chain Medkart, which runs stores across Gujarat, Maharashtra and Rajasthan and sells generic medicines, feels that more consolidation is on cards in the pharmacy space.
 
“Already, there are three or four big e-pharmacies, which are backed by the likes of Tata and Reliance. As these chains would need to expand their offline presence, several regional pharmacy networks would be up for sale. Organised pharmacy business in India, too, is largely regional. For example, Wellness Forever and Noble have presence in Western India while Apollo is primarily present in the southern market,” Agarwal said.
 
Recently, Adar Poonawalla-backed Wellness Forever filed a draft red herring prospectus for an initial public offering to raise Rs 1,500-1,600 crore.
 
Agarwal said there is enough room for growth in these micro-markets. Medkart, for example, plans to expand in its home market Gujarat and Rajasthan rather than spread thin aiming for a pan-Indian presence.