Online Pharmacy segment has seen the private equity and venture capital investments double in 2019. $321 million was invested in four deals as compared to $140 million in 10 deals during the previous year. The industry experts are expecting more activity in the segment, especially if a delayed regulatory framework takes place during the current year.
According to data from research firm Venture Intelligence, the investments into the sector has grown from $39 million in four deals in 2015, to an all-time high investment of $321 million last year. The highest number of deals happened in 2018 and various litigations - alleging that the existing regulations does not allow selling medicines online - started by the end of 2018, which has pushed the segment into uncertainties.
However, during 2019, the investors backed some of the major online healthcare and pharmacy retailers and the deal list is led by PharmEasy, which has seen fund-raising through the year to bring in around $220 million and the round is yet to be concluded, according to Venture Intelligence data. 1MG, HealthKart and a subscription based medicine delivery start-up Digi-Prex raised funds during the year.
"There is a lot of interest from potential investors for this space. Being a category with very good frequency, it has a lot of potential to capture and create offerings for the entire patient lifecycle. We saw all the four online pharmacies
raising funds and each contributed in growing the entire sector," said Dharmil Sheth, co founder of PharmEasy.
The factors that make online pharmaceutical space interesting to the investors include that Indian OPD healthcare is a $50 billion industry with inefficient channels for patients and other stakeholders. Factors like large market size, gross margins, current inefficiencies in the ecosystem leading to a huge opportunity for digital platform to disrupt and offer a seamless ecosystem, he added.
Industry experts said that the sector is expected to continue seeing investments as the digital ecosystem is growing in the country. More start ups should come into the sector as it needs more innovations and fill in the gaps in the existing healthcare system.
Group, after hiving off its front end of pharmacy business to another entity, is also looking at this space. The company management, in the earnings call with the investors for the quarter ended September, 2019, has said that the company is working on the segment, along with a consultant, though it is going slow. Sources said that it may take decisions related to entry into the segment during the year.