Netmeds business model: How does it work and make money

Netmeds Business Model – The e-commerce industry has been operational in India for many years but it has gained popularity in a short period recently. It has especially been alluring to the younger generation. One of the top online pharmacies in India is Netmeds. It deals with a huge range of healthcare products such as OTC pharmaceuticals, medicines, Ayurvedic medicines, homeopathic medicine, and general healthcare products. 

The company has delivery facilities all over the country. The founder of the online pharmacy is Pradeep Dadha who was born and raised in Chennai, India.

What is Netmeds and Business Model

By using their online platform Netmeds sells OTC medicines and prescription-based medicines. The organization uses certified pharmacists that screen all the prescriptions that are uploaded by different customers online while ordering. 

Netmeds India has established collaborations with several Indian manufacturers to ensure a straightforward availability of all the products. The medical items sold by Netmeds are collected from more than 200 sellers in India including top names such as Cipla, Ranbaxy, and Sun. 

The stocks kept by the company under the Netmeds business model are constantly monitored to avoid all the wastage. They are aware of the fact that the pharmaceutical sector is a fluctuating one especially due to weather changes and the different epidemics. 

The Netmeds business model uses a data analytics method for predicting the demand that will arise for the medicines. By utilizing this strategy Netmeds can manage its merchandise effectively to make the required medicine available for the people in need. 

Netmeds’ business model also has a correctly developed delivery system that has networks all across India. In all the Indian metro cities their orders are delivered in a single day. Although this fast delivery is affected by the location of the customer. What makes the Netmeds app extremely convenient is the user-friendly design used by it. 

The company keeps a record of the different orders placed by the users with a digital copy of their prescriptions. This allows ease when the next orders are placed. They use a large number of inventories across the country that allow them to make access to these medicines simple. The company is planning to expand to a B2B business model as well. They have plans to deliver drugs and other healthcare products to offline pharmacies at wholesale rates.

Also, read 8 best pharmacy delivery apps

How Netmeds work: The beginning and initial challenges

Netmeds was founded by Pradeep Dadha. His family ran a successful pharmacy business called Dadha & Company from Chennai. So, the family had a large legacy for several decades. The Netmeds business model was born when the founder was considering the initiatives for online sales to expand his family business. He was thinking about the possibility to use the online stores for selling medicine and came up with the idea of Netmeds. 

People began trusting the business model of the online platform and orders started to flow in. One of the more significant features offered by Netmeds was the simple layout of the website. To order a medicine you just need to follow 3 simple steps. The first step is to browse for the medicine required in the search bar. 

The second step is to add the medicine to the cart. Third, you can also upload the prescription when you are purchasing the prescribed medicine. Netmeds also has a diagnostic service that allows the customers to receive expert advice from certified doctors.

Back in 2010 when the Netmeds business model was launched it was a strange scenario for the clientele. Most people relied on the medical stores they were aware of personally. It was tough to convince them about buying medicine by using an online platform. The organization was also required to educate people about buying from online platforms. Most buyers did not even consider purchasing from anything other than the conventional methods for their healthcare requirements.

India has a huge population and there is a constant demand for medical supplies and drugs. So, all the online pharmacies are required to have enough stocks to satisfy all their needs. You were required to collect and deliver the drugs within a short period. 

The strategy used to analyze the prescriptions ensured that there are no incidents where self-medication or delivery of harmful drugs occurred. This also encouraged people to consult a doctor properly before they bought medicine.

Acquisitions and investments

Netmeds received an initial round of funding in 2015 with the aid of Orbimed. In the series A round, the company was able to raise a whopping $50 million. A year after this Netmeds bought an online healthcare and medicine delivery app called Pluss. In October 2017 another series B round of funding was performed that raised $14 million. 

Some of the major investors in this funding round were Tanncam Investment and Sistema Asia Fund. In 2018 they led a series C funding drive. This drive was successful in raising $35 million. The round saw finance being provided by Daun Penh Cambodia Group together with the existing investors.

In 2018 Netmeds took over JustDoc that was an established online medical consultation platform. It was announced that RIL (Reliance Industries Limited) was planning to get a large share of Netmeds. Netmeds collaborated with Reliance Retail Wonder to launch a grocery delivery service. The latest acquisition by Netmeds was in March 2019 when they bought KiviHealth. It is a big digital health data management system.

Challenges as a start-up

For the Indian customers, buying medicine online was a major shift in their approach to the purchase. Educating and convincing them to adopt this shift in their thinking and go beyond the conventional brick-and-mortar pharmacies was a huge challenge for the Netmeds business model. Similar to other e-commerce companies that deal the logistics while working in a vast country, it was not easy.

A typical chronic sufferer that might be consuming as many as six types of medicines every day and more in some cases was not going to the online alternative. So, Netmeds needed to source the medicine and deliver it quickly according to the required prescription. This was true for both over-the-counter and prescription-based medicines.

Another problem they had to tackle was the need to have a medical prescription for the patients. Many people will find this requirement to be unnecessary and awkward. However, by doing this it encouraged people that were not too keen to visit hospitals to see a doctor.

Revenue model

The revenue model used by Netmeds can be divided into three parts viz. marketing, commissions, and shipping charges. Out of these 3, the commission is the biggest contributor to the company’s revenues. The organization earned as much as Rs 4.46 crores just out of commissions alone in 2018. The revenue model used by Netmeds fundamentally caters to the chronic patient segment. This means they are serving more than a $10 billion pool of medicines across India.

They supply the medicine to the patients that consume the same medication consistently by using a reliable online resource. It helps them in easy access to the drugs and getting them delivered to their homes without too much hassle is terrific. There are also FMCG and OTC products available in a huge range of supplies. So, the patient can access prescribed drugs at a great price.

Conclusion

In the future, Netmeds has plans to team up with some key nutritional and pharma companies. They will be trying to target specific patient groups for leveraging the power offered by data analytics. Netmeds is completely focused on developing its warehouses and other fulfillment centers across the country. At the moment they have 26 fulfillment centers in India. Netmeds Marketplace is a subsidiary of Netmeds that uses a B2C e-commerce model. This unit saw a decline in revenues by 44% in the year 2020. RIL also holds a major stake in Netmeds of around $83 million.

If you are keen to develop a medicine delivery app like Netmeds for your pharmaceutical business, get in touch with the experienced professionals at Jungleworks for immediate solutions.