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Business Idea

An online store for discovering and buying generic drugs

BUSINESS IDEA

Generic drug discovery and e-commerce

 

The Problem

In India, generic drugs have largely remained unknown. Here’s why:

  • Doctors don’t want to prescribe it due to ₹0 kick-back.
  • Pharmacies don’t have time to educate buyers and then sell.
  • Normal users are confused with various alternatives.

 

How Big It Is

Our domestic pharma industry for 2020 stands at ₹1.4 lakh crore. Generics drugs, which cost around 30% lesser than their branded counterparts, account for a small minority of the domestic sales.

These are high-margin drugs for pharmacies, with them buying it at 1/3rd of MRP. If we maintain a sizeable monthly order size from them, we can easily net a 40% commission on all drug purchases. This brings our Total Addressable Market (TAM) for generic drugs to ₹39,200 crores for 2020.

(₹1.4 lakh crore) * (70% generic price, compared to branded) * (40% commission)

 

Solution

A no-bullshit, generic drug discovery mobile app!

Users simply share their branded drug name and our system comes back with its generic counterpart manufactured by a reputed pharma company, along with an option to checkout.

  • Start with your own city.
  • Select limited pharmacy partners for supply.
  • App users begin by typing their drug name (generic or branded).
  • Even voice search can be enabled.
  • For branded drugs, only one generic alternative is suggested, manufactured by a reputed company.
  • If there is no generic counterpart, users can choose branded.
  • For generic drugs, users are provided its uses, side effects, Active Pharmaceutical Ingredients (APIs) and branded drugs using the same APIs .
  • Users see the drug price (with ~ % savings, vis-a-vis branded).
  • Both online payment and COD option is available.
  • Our delivery guys pickup drugs from partnered pharmacies and deliver it to customers.
  • If drugs need prescription, buyers present it at delivery.

Without 0 confusion, a trusted name and a minimum discount of 30% off compared to its branded counterpart, the app has the potential to disrupt the retail pharma market.

 

Pricing / Business Model

As mentioned earlier, charge a 40% commission on generic drug orders from pharmacies. For branded drugs, which will hardly account for 5% of sales, charge a 15% commission. These only serve as backup.

 

Expected Earning

With a clean UI, helping users find the drug they need quickly, and targeted digital marketing, the following can be assumed as your returns for the first year:

Users acquired over a year (A)2,40,000 (20,000 p.m. x 12 months)
Active users making atleast 1 purchase in Y1 (B)12,000 (5% of A)
Average yearly purchase per active user (C)5
Average order size (D)₹350
Total sales for Year 1 (E)₹2,10,00,000 (B x C x D)
Commission on generic drugs (F)₹79,80,000 (E x 95% share x 40% commission)
Commission on branded drugs (G)₹1,57,500 (E x 5% share x 15% commission)
Total Commission (H)₹81,37,500 (F+G)
User acquisition cost (I)₹19,20,000 (₹8 x A)
Order satisfaction cost (J)₹15,00,000 (₹25 x B x C)
Expected Earnings₹47,17,500 (H-I-J)

Thus, you can achieve a ~ ₹47 lakhs revenue in 12 months with proper execution!

If you love the business idea and would consider building it together, let’s get on a no-strings-attached, discovery call 🙂

 

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