Leveraging COVID19 for

expanding business of PharmEasy

MS PROJECT STAGE 3

GROUP MEMBERS
Sourabh Das (2020PGP055) | Siddharth Anand (2020PGP053) | Harshit Birla (2020PGP016)
Shikha Kumari (2020PGP045) | Devesh Shah (2020PGP042 | Mahak Jain (2020PGP023)
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Table of Contents

Executive Summary ...................................................................................................................................................... 2

Company Background .................................................................................................................................................. 3

Literature Review.......................................................................................................................................................... 4

Consumer and Partner Insights .................................................................................................................................... 7

Analysis.......................................................................................................................................................................... 8

Recommendations ....................................................................................................................................................... 12

References.................................................................................................................................................................... 12

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Executive Summary

Online pharmacies or e-pharmacies are online platforms where consumers can buy medicine and get them
delivered at their homes without setting a foot outdoors. These platforms have refined convenience and
accessibility for consumers for an essential commodity. According to Frost and Sullivan, the Indian e-pharmacy
market was valued at INR 3,500cr in 2018 and is estimated to grow at a compound annual growth rate of 63%
to reach INR 25,000cr in 2022. It is expected that the e-Pharmacy model could account for 15%-20% of the total
pharma sales in India over next 10 years. Factors supporting this growth include:

 Increase in internet penetration and usage

 Increase in preference for online shopping
 Government initiatives boosting availability of generic medicines and digital connectivity
 Changing disease patterns in India with more focus on non-communicable diseases
 Booming Indian economy and increase in domestic demand due to lifestyle changes

Though major opportunity lies in addressing the growing demand of the developing Indian market, the Indian e-
pharmacy industry is still in its nascent stages and faces immense competition from the unstructured and
fragmented eight lakh brick and mortar pharmacies.

However, the COVID19 pandemic has now mandated social distancing and disrupted the shopping habits of the
consumers. The consumers of the pharmacy sector who are people with some illness, are at a higher risk to
contract COVID and are looking for alternatives to avoid buying from the crowded brick and mortar pharmacies
in the current times. Hence, the e-pharmacy becomes an important sector to cater the consumer needs with the
changing consumer behavior due to the pandemic.

One of the key players in the segment is PharmEasy which started operations in 2015. It supplies medicine all
over India to more than 1,000 cities and towns covering 22,000+ pin codes all over India including Tier II cities.
It recently got an approval for merger with another market player – Medlife. The company would consolidate a
major market share. However, given the constraints posed by the brick and motor retail pharmacy stores, lack of
government regulation and consolidation of existing e-Pharmacy players requires PharmEasy to establish itself
as a leader by devising a marketing strategy that ensures consumers wants are met in the most effective ways.

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Company Background

PharmEasy is an online pharmacy which started operations in 2015 and is headquartered in Mumbai. The online
platform uses a market place-based model to supply medicine and conduct diagnostic tests. Since its inception,
the company has been able to get a total of USD 328.5m from 18 investors and is currently in Series D cycle of
funding. The company is one of the largest online pharmacies in India selling medicines and healthcare products,
in collaboration with local pharmacy stores and diagnostic centers in order to fulfill extensive medical needs of
customers with robust local distribution channels in place. It has been promoting itself through extensive
advertising and by partnering up with other brands to hand out promotion codes and coupons. Its pricing strategy
of discounting and using margins is relatively the same as its major competitors which include 1MG and Apollo
Pharmacy. Its target customers include urban middle-aged population within the middle-class income bracket.
The company’s vision focuses on deliver genuine medicines at affordable rates by optimizing the supply chain
and logistics. The platform’s salient features include:

 Extensive range of generic and specialized medicine

 Partnership with laboratories like Apple diagnostics, iGenetic Diagnostics, Oncquest Diagnostics, SRL
Diagnostics, Dr. Avinash Phadke labs, SRL Diagnostics and Suburban Diagnostics for conducting
diagnostic test at consumers’ homes or sample collection
 Medicine reminders
 Medicine refills – Subscription model
 Digital prescription records
 Free E-Doctor-Consultation
 Easy return policy

Past Marketing Initiatives

PharmEasy marketing touches upon all four 4Ps of marketing:

Price – The company just like its competitors has been offering discounts on products available on its platform.
It offers up to 35% discount on medicines and other allied services. It also has tie-ups with mobile wallets to
provide exclusive discounts.

Place – It has a robust distributions channel as it has partnered with local pharmacies to expand its reach to
22,000+ pin codes all over India.

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Promotion – It has used multiple media formats to advertise itself such as hoardings, billboards, print and
radio campaigns, social media advertising and television ads with a catchy jingle “PharmEasy, PharmEasy,
take it easy like PharmEasy”.

Product – It offers an extensive range of medicines and allied services in its efforts to become a one stop shop
for all healthcare and medicinal products.

Literature review

In the literature review, a situational analysis has been done to understand the current market scenario in the e-
pharmacy segment. The analysis is based on reports published by Frost Sullivan, FICCI and Analysys Mason on
e-pharmacies in India.

Competitive Landscape
Four major players dominate around 85% of the e-pharmacy market in India. Around 30% of revenue in the
market is generated by Medlife, followed by PharmEasy, 1mg and NetMeds. Other small competitors in the
pharmacy markets are CareOnGo, Lifcare, mChemist, MedsOnWay and Myra. E-pharmacy players are majorly
based in the metro cities and are also planning to expand their reach to the Tier 2 and Tier cities. Their model
for customer acquisition is to offer a high level of discounts and promotions.
To widen the customer base, E-pharmacies also plans to offer a variety of complimentary services such as online
consultations, doctor appointments, partnerships with diagnostics centres, sample collection, online health blogs,
medicine refills and subscriptions. This will help to cater to all the healthcare needs on a single platform and also
to attract and retain customers, and generate more revenue. Netmeds, PharmEasy and 1MG offer diagnostic
laboratory tests and sample collection.

Fig. 1 – Revenue share of E-pharmacies in India(2019). Source – Analysys Mason

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Government policies and regulations

The new regulations in the wake of the pandemic have provided a boost to the e-pharmacy sector in India. The
pharmaceutical sector was also positive given the draft regulations that the government in 2018. The Drug
Controller General of India or the DCGI was allowed under the draft guidelines for regulating the e-
pharmaceutical sector and for online retailers to sell drugs all over the country by centralising the licensing
system using the only license as opposed to several licences in the previous frameworks. This helped with the
ease of doing business and reduced uncessary costs which ultimately helped the e-pharmacies in their expansion
efforts.
The e-pharmacies’ revenue is expected to grow at a staggering rate of about 54% CAGR in the next 4 years to
reach about USD 2.1bn in 2023, which will help the e-pharmacies to increase the revenue contribution to around
5% of revenue in the overall pharmaceutical sector. This is possible because of the government and investor
support as the e-pharmacies will make healthcare more accessible and affordable through medicines of reduced
cost.

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Technological advancements
Technology has the potential of altering and transforming the ecommerce business wherein the customers are
empowered. Online business model not only streamline the supply and demand but also ensure organized
tracking and recording of the data for audit trails, thus making the healthcare system more structured.
Furthermore, technology can be a catalyst in overhauling the Indian healthcare system and availability of
affordable drugs through e-pharmacy platforms would be a central aspect of it.

Unit economics and margins

Discounting has been a critical marketing strategy to accumulate a more extensive customer base and change
customer behaviour in favour of the online purchase of medicine. However, in the future, the discounts are bound
to decrease, and efficiencies in warehousing and delivery costs due to churning of more orders will improve the
contribution margin. Furthermore, as medicine are directly sourced from manufacturers, the gross margin is
already high.

Socio-Economic Changes
The Indian customer habits are changing drastically due to several socio-economic changes. Urbanization has
led to changes in lifestyle and rise in literacy. This has impacted the demand for advanced medical treatments,
pharmaceutical products and general hygiene and wellness products. Furthermore, increase in income has led to
increased consumer spending on overall healthcare which also included health insurance and preventive health
practices. However, a major epidemiological transition has taken place in India in the last 25 years, and the
disease incidence has increased from communicable to non-communicable diseases. This increase in lifestyle
diseases like diabetes and hypertension generates a regular and lifelong demand for drugs.

COVID19
The COVID19 pandemic has led to significant changes in the e-pharmacy segments. In 2020 alone, two major
deals in the sector were brokered. Reliance Retail became a major shareholder in Netmeds, whereas
PharmEasy and Medlife’s merger was approved by the authorities. Furthermore, the e-commerce giant
Amazon announced medicine delivery services on its platform. These changes have led to a more competitive
industry scenario.
However, the pandemic has also acted as a catalyst in positively changing consumer behaviour. Lockdowns,
social distancing norms and a heightened need to stay fit and healthy has given a boost to sales of online
pharmacies.

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Customer and Partner insights

One – on – One interviews were conducted because of their cost-effectiveness as compared to focused group
interviews and our design was be a mix of Exploratory research and Descriptive research. Survey included
both closed-ended initial questions to begin the conversation along with open-ended questions so that we
understand the customer needs in their own words. The questions asked were around the basic customer needs
such as
1. Convenience - Customers who require regular medication value the ability to have medicines delivered
to their doors.
2. Cost/Affordability - E-pharmacies can source products directly from manufacturers and can, therefore,
offer more-significant discounts than local pharmacies.
3. Reliability/ Authenticity - The authenticity of drugs can be assured because e-pharmacies store all
records digitally, effectively reducing the risk of counterfeit medicine and thus assuring the authenticity
of the drugs.
4. Accessibility/ Availability - Local pharmacies cannot scale their operations as compared to the e-
pharmacies to offer a wide range of SKUs to their customers by aggregating supply.
5. Delivery speed - During the pandemic, it is important to take into consideration the local time
restrictions for delivery time estimation.

Insights obtained after the interviews with our customers (patients) and collaborators (hospitals/ general
medical shops) are -
a. Patients – Some patients were already using an e-pharmacy service while a majority of the patients
were unaware of the e-pharmacies. Few of the patients had a misconception that e-pharmacies were
fraudulent and the medicines were expensive as compared to the brick and mortar stores. Few patients
were unaware of the e-pharmacies before were actually ready to use their services in the future because
of the benefits provided especially because of the social distancing norms during the COVID-19
b. Hospitals/Clinics – Most of the clinics is accompanied by a traditional medical shop in the vicinity and
hence, the doctor don’t find any motivation to refer the customers buying from e-pharmacies. But in the
case of online consultation, the consulting doctor can be incentivized to promote the use of e-

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pharmacies. Major hospital chains have an in-house pharmacy store and hence won’t recommend
buying medicines from e-pharmacies
c. Brick and Mortar Medical Shops – The brick and mortar medical shops are aware of the e-pharmacies
and are more concerned with the e-pharmacies damaging their business due to discounts and safe
services especially during the time of social distancing norms and lock-downs due to COVID-19

Analysis/ Prescriptive measures - Marketing Strategy (capitalizing on the Pandemic) and

Marketing Tactics

The basic features such as delivery to remote locations, on-time delivery of the correct products without
tampering, extensive product selection and competitive pricing are provided by all the major e-pharmacies in
India. Hence these form the points of parity. However, for PharmEasy to appeal to more customer, it needs to
augment its products and services to be able to retain its position as a market leader while garnering a larger
customer case.
 Product – PharmEasy’s should strive to become a one-stop-shop for all medical and wellness needs.
Focus on Mental Health-related products as such therapy and psychiatry session could help the
company explore a new customer territory. Furthermore, allowing booking of appointment with
speciality doctors could make the product more wholesome. Moreover, a digital medical briefcase can
be incorporated into the app that could contain the medical history of the patient along with latest scans,
reports and prescriptions.
 Promotion – An in-depth STP analysis could help establish various segments that can be catered to and
then devising targeted promotional schemes could help the company appeal to more customers. For
example, as millennials are more likely to order medicine for their elderly parents who are not
acquainted with technology, a strong social media marketing campaign would be more productive.
 Price – E-commerce of all types are thriving in India due to deep discounting, which is also offered by
PharEasy. However, implementing a point-based reward/loyalty system wherein the points can be used
as a payment method could reduce customers switching to other platforms.
 Place - Emergent delivery of crucial medicine under a stipulated time can differentiate PharmEasy’s
offering. Express shipping and delivery could help the company tap a newer customer base. However,
to implement this, it has to create a network and strengthen its ties with local pharmacies to ensure
consistent supply.

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 People – Post the merger with MedLife, PharmEasy would become a major market player with a
significant customer base. Therefore, it would be important to retain customers rather than acquiring
new customer as acquiring a new customer is anywhere from five to twenty-five times more expensive
than retaining an existing one. Therefore, the company can improve upon its customer grievance
handling system in order to provide quick and easy solutions to customers. Moreover, employees too
should be looked after as they drive the business and deliver results for the company. So, employee
engagement programs should also be improved upon to improve this aspect of the marketing mix.
 Process – The process of purchasing any product or service on PharmEasy should be seamless.
Therefore, the company should focus on enhancing customer experience by improving upon its website
and application interface so that technologically handicap people can also access the platform and use
it.
 Physical Evidence – More focus on packing to make it tamper-proof yet easy to handle could serve as
a point of difference for the company. Leveraging technology to streamline packaging procurement
process and ergonomic packaging design could help win over more customer.

SWOT Analysis

1. Strength

• First mover advantage in a booming sector

• Added capacity following the merger with Medlife

• Currently in Series D funding cycle with

2. Weakness

• Limited service portfolio – Services offerings are limited with a scope of expansion

• Unavailability of Express shipping facility

3. Opportunity

• Changing demographics and income levels

• Internet penetration and reduced data tariffs

• Increasing preference for online shopping

• Changing disease patterns with more focus on NCDs

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• COVID 19 - Leveraging the pandemic with social distancing rules and the improbable nature of
lockdowns can help PharmEasy to advantage of current situation

4. Threat

• Prescription fraud

• Intense competition from brick and motor shops, other start-ups and ecommerce giants

• Lack of government regulation in the e-pharmacies sector

• Industry wide consolidation of companies due to mergers for eg Medlife and PharmEasy.

• Circulation of tampered and fake drugs without proper storage facilities

Porter’s Five Force Model

Industry Rivalry - High - The e-pharmacy sector is going through a transformative phase with key players
consolidating powers by way of mergers and acquisitions. Furthermore, the presence of eCommerce giants has
further crowded the space. This would eventually lead to fewer players controlling the whole market and
industry rivalry would be high.

Bargaining power of Suppliers - Low - PharmEasy uses the Marketplace model by partnering with local
pharmacies to deliver medicines and other health supplies. There are 8 lakh brick and mortar pharmacies
operating in India. Implying that the space is already very crowded, therefore the bargaining power of suppliers
is low. Furthermore, given the Government regulations regarding the availability of essential drugs, there is a
steady supply of basic drugs and healthcare supplies.

Bargaining power of Buyers - Very High - The customers have quite a few options in terms of ordering their
health supplies online. The switching cost for them is negligible and go wherever they find better discounts.
Therefore, the bargaining power of buyers is high.

The Threat of Substitutes - Medium - The substitute to online pharmacies is local brick and mortar pharmacies,
which might deliver products instantaneously but are limited in terms of inventory and discount offered.
Therefore, the threat of substitution is medium.

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The threat of New Entrants - High - There are about 3,225 startups in India that focus on health-tech. The
process of starting an online business in India is relatively easy and attract a lot of entrepreneurs. Therefore, the
threat of new entrants is also high.

Integrated Marketing Communication – 6M Model

1. Market

Identifying the target audience is crucial to know to whom is the communication being addressed to.
PharmEasy’s target customers include urban middle-aged population within the middle-class income bracket
spread across metros, tier 2 and tier 3 cities. Hence, the communication should resonate with all the identified
stakeholder. For Example: PharmEasy’s current marketing campaign uses the “easy” from its name to tell the
customers how easy it is to order medicine and other medical services from their platform at a great bargain.

2. Mission - What is your objective of communication?

The primary objective of the communication is to gain more customers. A Health-Tech startup facing intense
competition from both offline and online pharmacies objective would be to consolidate loyal customers and
eventually increase sales. PharmEasy’s mission is to revolutionise the healthcare scenario in India. The same
could be channelized in its communication strategy to portray it as a wholesome healthcare ecosystem in India.

3. Message - What specific points must be communicated?

PharmEasy has run a successful campaign using wordplay to communicate the ease with which one can order
medicines online avail offers. However, as it tries to expand the scope of its services and integrates more
stakeholders, it might have to enhance its message. Its aim to become one stop shop for all health-related
services would mean it would have to be more inclusive and talk about the wholesome experience it can offer
especially with “EASE”.

4. Media - What communication vehicles should you use to get the message across?

The target market influences the media channels used to spread the message. As we target middle aged and
middle-income groups in cities, the common ground between all would be television and radio. Furthermore,
as India embraces the internet and social media applications, online advertising using platforms such as
Facebook, Instagram, etc can also help in gaining more traction and registering the brand into the minds of the
customers.
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5. Money - How much will be budgeted for the effort?

PharmEasy is a promising startup which has attracted substantial funding from various Venture Capitalists and
Private Equity firms. Being backed by such investors with a primary focus on gaining more market share
would mean that the company could spend a sizeable amount on advertising and promoting itself through
various channels.

6. Measurement - How will you assess the impact of your communication?

Monitoring and measuring the progress allows control over the impact of the communication sent out to
customers. Key Performance Indicators such as the number of new customers added, customer referrals used,
monthly usage statistics, recurring revenue from existing customers through subscription, etc., can be used to
keep a track of the performance. Use of analytics in case of online/social media marketing through clicks, link
redirects, traffic measurement can be used to understand how effectively messages have been communicated.
Monthly usages in term of number of times a customer orders in a month can also be used to track
performance.

Recommendation/Strategies for Expansion

1. Suitable arrangements must be made to ensure that the medicines are packed, transported, and delivered
in such a way that their integrity, quality, and effectiveness are preserved
2. Provide clear information regarding the logo, license number, and contact details of pharmacists for
addressing patients’ queries and grievances on the website / mobile application
3. Emphasize on chronic elderly patients living in nuclear families, and patients who are not in a condition
to go out to find a pharmacy especially in the COVID-19 who will benefit the highest from the online
deliveries
4. Use technological advancements to bring price transparency and to create medicine alerts and
pregnancy alerts to respective consumers
5. Partnering with the traditional medical shops by educating the about e-Pharmacy model enables the
existing traditional pharmacies to cater to a broader set of customers and also ensures that the inventory
is consolidated by reducing the requirement for working capital, removing wastage from system and
increasing margins, thus making the model sustainable

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6. Integrating online medical consultation and services for ayurvedic medicines so as to make PharmEasy
a one-stop solution for all medical concerns by differentiating itself from its competitors

References

1. https://www.researchgate.net/profile/A_Jain6/publication/340592506_Online_Pharmacy_in_India-
A_SWOT_Analysis_2020/links/5e9312a292851c2f52991275/Online-Pharmacy-in-India-A-SWOT-Analysis-
2020.pdf

2. https://www.analysysmason.com/globalassets/x_migrated-media/media/analysys_mason_e-
pharmacy_quarterly_oct19.pdf

3. https://ww2.frost.com/wp-content/uploads/2019/01/Frost-Sullivan-Outlook-on-e-pharmacy-market-in-
India.pdf

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