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) |
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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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