Pharmacy business plans, models and significant aspects

Folks, do You remember when was the last time You ran down to that pharmacy store in the next lane for getting that one medicine urgently? Most probably in the last decade. Yup! You read it right. The generation today hardly understands the efforts that we used to put in to get that one medicine from the druggists for our loved ones. So, this made me thinking, what has happened during this decade to the pharmacy sector as a whole. Let’s have a look!

There has been drastic transformation in the methods of carrying out digital pharmacy business worldwide and especially in India. India is the third largest pharmaceutical market in terms of volume and thirteenth largest in terms of value. Continual improvement in existing digital pharmacy business models has stimulated growth in the pharmaceutical industry over the past decade. The modern digital business models for pharmacy have not only reduced the hassle due to their doorstep delivery services; but also their quest for continuous feedback for improvement in quality of services is incredible.

The cross check by qualified Doctors on the prescriptions on telephone call at the ease of the digital users is an advantage that has taken over digital business opportunities for pharmacy in India by the storm. Especially during the times when the pandemic hit hard worldwide, the digital business model of pharmacy witnessed the highest peak of the sector ever. The demands for COVID 19 related medicines, the pharmaceutical disposables and the surgical masks had an undying rise like forever.

The production of medicines, quality, quantity, pricing, marketing, packaging and final doorstep delivery; everything has changed in online pharmacy business. The habit of ordering medicines online with a single click or call and that too with some added benefits or great offers has led to the ever rising boom in this sector.

Today, 45% Consumers prefer online mode for pharmacy needs in urban and metro regions. People aged between 35 and 74 years buy medicines online. There are over 200 million online users as on today.

Aren’t these numbers mind-boggling? Of course Yes! Given this background of the booming sector of E-pharmacy in India, let’s dig deeper into understanding as to how exactly a digital pharmacy business could be successfully established. Taking this discussion further, let’s first understand the three basic categories of E- pharmacy models which are operational in India as on today.

1. Inventory based Pharmacy Business Model

In such business model, the business stocks its own inventory of medicines and healthcare products and sells them online. There is no involvement of any third party or middlemen in such business model.

2. Marketplace Pharmacy Business Model

In this model, the digital platforms are simply an avenue for customers to buy medicines and healthcare products from local chemists. In this model of business, Government of India has allowed 100% FDI (Foreign Direct Investment).

3. Hybrid Business Model of Pharmacy

This model allows the traditional brick and mortar chemists and druggists to take their reach to digital channels and work on an offline as well as online mode. In today’s date, the hybrid business model is the most famous model for digital pharmacy in India.

Great! So we are now clear with the broad categories of digital pharmacy business models. This leads to the next question: 'Who is the Competition in Online pharmacy business?' There are existing established market players in this E- pharmacy sector since 2012. Some important digital pharmacy business companies in India are Pharmeasy, Medlife, 1MG, Netmeds, etc.

Pharmeasy app was launched in 2015. It is a marketplace business model. Its unique features are medicine reminders, subscription-based medicine refills, online doctor consultation, sample collection, etc.

Medlife was established in 2014. It is an inventory based model. It provides online doctor consultation, laboratory tests, generics and ayurvedic brands PAN India.

1MG was launched in 2014. It is a marketplace business model. It deals in non- prescription, over the counter & wellness products and diagnostic tests PAN India.

Netmeds being the oldest of them all was born in 2012. It is again an inventory based model which provides diagnostic and telemedicine services along with delivery of drugs and medicines.

The varied online pharmacy app development companies come up with unique marketing strategies every single day. Undoubtedly, the pandemic has changed the entire scenario of the working patterns of online pharmacy business models in India and the world at large. The uniqueness in the marketing fashion of each online pharmacy business model can still be experienced given the heat in the competition among the online pharmacy business market players.

The pharmacy business has transformed from its typical brick and mortar look into a 'medicine a click away'. The online pharmacy business development models in India have led to a surge in employment levels also, in terms of extremely smooth logistics, distribution networks and frontline delivery staff.

Well, we had a glimpse of a few established players in E-pharmacy market in India. Going further, while setting up any business, one seeks to understand the various laws and regulations applicable to that sector. So here's the list of important laws that regulate the E-pharmacy sector in India:

1. Drugs and Cosmetics Act, 1940
2. Drugs and Cosmetics Rules, 1945
3. Pharmacy Act, 1948
4. Information Technology Act, 2000
5. Narcotic Drugs and Psychotropic Substances Act, 1985
6. Drugs and Magic remedies (Objectionable Advertisement) Act, 1954

Besides, there are few mandatory conditions applicable to the digital pharmacy business models in India:

1. There must be a pharmacist and registered chemist on the Board.
2. The drug prescriptions must be valid for accepting orders.
3. The bills must be signed by a registered pharmacist or chemist.
4. All drug orders must be monitored by a registered pharmacist.
5. Drugs must be sent from a chemist with a retail drug license in case of marketplace model.

Okay, so the laws and regulations are done with. What comes next to our mind is 'what is exactly the process of setting up any business model in Digital Pharmacy?' It consists of the 5 steps as discussed:

1. Business Registration in the form of one of the various types of Companies
2. Getting FDA License approved for retail sale of drugs within the premises of the state for which the license is granted.
3. Getting FSSAI License approved from the authorities to sell food related items such as wellness products, nutritional supplements, etc.
4. Getting additional licenses approved from various regulatory authorities such as Shop and Establishment Certificate, Trademark, GST Registration, Warehousing License, etc.

The various factors that have contributed to the growth in E-pharmacy sector are increase in Health Insurance access, Government schemes such as National Health Protection Scheme, 100% FDI Policy in medical devices manufacturing businesses, increased spending on medicines by Indian households and growing patterns of diseases.

In this context, there are five significant aspects that come into picture while we discuss about the online pharmacy business models in India:

1. Human ailments, their diagnosis and medicinal remedies : The online pharmacy business models have started working largely on the basis of medicinal remedies for common ailments. The availability, affordability, deals, convenience and duration of delivery of such medicines, all these factors are taken due care of by these digital pharmacy business platforms. The cross verification of the prescriptions given by the practicing doctors, their approval and availability of medicines is confirmed by the pharmacists in various business models discussed earlier. The medicines ordered from such online pharmacy business platforms fetch great deals if purchased over a certain quantity or price and thus the users take delight in cracking worthy offers.
2. Competition, promotions and business development models : The online pharmacy business models undergo a process of thorough SWOT analysis before taking a plunge in the market. The big sharks of the marketplace tend to enjoy the privilege of oligopoly in the field of online pharmacy business.
   SWOT Analysis : The strengths are high profitability and revenue, new technological innovation, quicker shopping, lower maintenance cost. The weaknesses of E-pharmacy business mainly are lack of awareness, multiple checks required to sell online, shipping and delivery restrictions. The opportunities are relatively less competitive market, high market demand, 100% FDI, easily available products. However, there are threats to this business too. They are mainly legal and regulatory changes, technology threats and breaches, chance of drug abuse by customers. Further, the marketing strategies of these digital platforms are inspired from the ideas of out of the box thinkers, research analysts and field experts. The pool of talent is not only full of Medical practitioners in this field but also technical people concerned with the online pharmacy business developers at large.
3. Business Precision involved : Up to date information, technological upgrading, scientific upgrading, competition, logistics, hassle free delivery and returns, online user friendly payment portals, require precise business management. Accurate medicines in terms of brands, compositions, quantities, and prices need to reach the end user and that too without delays. The online pharmacy business models thus demand extreme level of professionalism percolated right up to the delivery partners. The online prescription sharing is one of the finest technologies in the pharmaceutical industry nowadays. This ensures transparency in business models and pharmacists are clear on their deliveries beforehand.
4. Maintenance of Goodwill and Trust : The online pharmacy business models worldwide and especially in India cannot afford to compromise on goodwill and trust their customers have showed on them. It is thus the duty of the management of such digital pharmacy business companies to channelize their business in such directions where there would not be any loopholes that allow duplication of medicines, unqualified doctors cross verifying the prescriptions, abuse of drugs, etc. This responsibility needs to be shared equally by the policy makers in this sector so as to enforce strict laws and regulations for any violations in this regard. After all, pharmacy is the only field which sways between life and death up- close and real.
5. Encouraging Business Environment for upcoming market players : Digital pharmacy business is an inclusive market as on today. Hence, it is essential to provide the emerging online pharmacy business developers with ample opportunities and a positive business environment. The internal and external business environment factors have to go hand in hand for the purpose of overall growth and sustainability of the online pharmacy business. The logistics and supply chain management needs to be sufficiently motivated in order to ensure smooth functioning of online businesses. Continuous technological and scientific advancement in the field of medicine is the only key to guaranteed success in this industry. Checking of the expiry of medicines before delivery is crucial in this sector. Online pharmacy business models need to ensure up to date services, near contactless delivery, risk free payments, medicinal issue resolution portals and after sales constructive feedback mechanisms in place. This is how the target audience would find it easier to shift to such business models instead of the traditional chemists and druggists. E-pharmacy business models could tie up with medical publications, journals, newspapers, medicinal bloggers and content writers to publish content for free on their portals for loyal consumers.

In a nutshell, the sky is the limit for online pharmacy business models in the modern era. After all, the process of ailments haunting the human species is never ending, so must be the medical treatments!