e-pharma 2021-02-01

Decide which is better between E-Pharma and Offline Pharmacy

Medicine spending in India is projected to grow 9-12 percent over the next five years.

By Content Writer
Decide which is better between E-Pharma and Offline Pharmacy

The pharmacy business has arisen as quite possibly the most profitable segment in the healthcare industry. Experts of the healthcare industry accept the fact that India is soon becoming one of the top ten nations in terms of individual medical expenditure. Medicine spending in India is projected to grow 9-12 percent over the next few years. 

In this way, given the projected development, promising future, and profits, everybody needs a piece of the pie. However, the difficulty occurs while choosing the medium of venturing into the pharmacy business. The pharmaceutical segment has generally been an unorganized market with the greatest number of independent businesses. Presently, the organized players are getting famous with expanding their footprint through franchising. Additionally, with the development of e-commerce and increased penetration of the internet, another branch of pharmacy has developed­ which is e-pharmacy. 

With various ways accessible to the investor, it may get overwhelming to narrow down on one segment to invest their money in. Here we have mentioned both the advantages and disadvantages of e-pharmacy and the offline business to help you settle down on the best one for you, prior to investing. 

The simplicity of Business:

Setting up an online pharmacy in India is an overwhelming task due to the laws related to it. The owner should purchase a lot of medical insurance in the case of a liability claim. The normal expense of a pharmaceutical claim is more than $14,000, and those numbers will probably increment because of the still fairly unregulated online healthcare space. 

Aside from this, you should pay for a website developer, courier service, advertisement, and so on. Thus, the initial investment might be between 20 - 50 lakhs. In addition, the law just permits selling certain medications(OTC medications) online without a prescription. You need to experience each little detail and afterward counsel your attorney before you start a store. 

Then again, the offline pharmacy offers you the simplicity of setting up a business. With the franchising model ascending in each area, pharmacy franchises are arising as the most favored alternative. The pharmacy franchises require an initial investment starting from INR 8 – 10 lakhs, which incorporates licensing and documentation. The operational costs may cost anything between INR 30,000-80,000. In addition, the greater part of the franchisors deal with the marketing and promoting, saving you from that cost.

Profit Margin:

The profit margin in offline pharmacies normally goes between 15-26% for branded medicines, which may go up to 40-50% on account of generics. Indeed, even with offering 12-80% discounts to pull in customers, franchisors guarantee that their franchisees acquire a 15% edge at least. 

On the other hand, cash burn in the e-pharma industry is a common issue because the discount (up to 35% for a few) surpass the margins in the chain (around 30-32%). While the competition to scale up requires greater adoption and discounts which are an integral part of growth, profitability cannot be achieved only by operational efficiency and lowering of delivery costs; discounts have to come down to reasonable levels to achieve breakeven and any meaningful profitability.

Consumer Acceptance:

The pharmacy business is all about serving the necessities on schedule. This is the significant motivation behind why offline pharmacies are booming. Medicine and drugs are something that consumers need rapidly; they won’t have the time to wait 3-4 days for their order to get delivered. Consumers generally incline toward offline stores because of their hand-to-hand delivery of medicines and credibility, likewise, a reputable brand name adds a brownie point for offline pharmacies. 

Despite expanding downloads of the mobile applications, certain difficulties like trust deficiency (emerging from the dread of getting fake medicines), customer support issues (connected to timely delivery and fast redressal), language barrier (absence of portable applications in regional dialects), access (unfit to arrive at far off parts of the cities) and data privacy (particularly with health records and prescriptions) remains in the online space. E-pharmacy organizations need to depend on creative digital marketing strategies to build their client base, user engagement, and transactions/user.

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