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 find it confusing.
Solution
A minimalist mobile app, where users share the name of their branded drug and the system comes back with its generic counterpart, along with an option to checkout at the best price.
How It Works
- Start with your own city.
- Select limited pharmacy partners for supply.
- App users begin by typing their drug name (generic or branded).
- 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 with their uses, side effects, 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.
- Delivery partners pick up drugs from the pharmacies and deliver to customers.
- If drugs need a prescription, buyers present it at delivery.
Pricing / Business Model
Since generic drugs manufacturers don’t have to invest money in developing and marketing a new drug, they are priced lower than their branded counterparts. Even the margins of pharmacies are substantially higher for generic drugs.
Hence, you can easily charge a 40% commission on generic drug orders from pharmacies. For branded drugs, which only serves as a backup in case of generic drug unavailability (5% of cases), charge a 15% commission.
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:
| Mobile app installs (A) | 100000 |
| First purchases (B = A*5%) | 5000 |
| Repeat purchases (C = B*4) | 20000 |
| Total purchases (D = B+C) | 25000 |
| Average order size (E) | ₹450 |
| Total sales (F = D*E) | ₹1,12,50,000 |
| Commission on generic drugs (G = F*95%*40%) | ₹48,09,375 |
| Commission on branded drugs (H = F*5%*15%) | ₹84,375 |
| Total revenue (I = G+H) | ₹48,93,750 |
| App install expense (J = A*₹8) | ₹8,00,000 |
| Other marketing expense (K) | ₹3,60,000 |
| Brand packaging (L = D*₹5) | ₹1,25,000 |
| Delivery expense (M = D*₹30) | ₹7,50,000 |
| Annual pay for 2 ops staff (N) | ₹7,20,000 |
| Annual tech expense (O) | ₹3,00,000 |
| Total expense (P = J+K+L+M+N+O) | ₹30,55,000 |
| Total Y1 profits (Q = I-P) | ₹18,38,750 |
Even if you spends around ₹7L to ₹9L on building the mobile app, you can easily double your investment in the first year itself, if executed properly! Provided that the generic drugs are continually sourced from reputed manufacturers, with customers receiving attractive discounts, they will stick on, resulting in a high Life Time Value (LTV) for every acquired user.
Technology
For executing the idea, you will need a mobile app that can support millions of concurrent users, searching for and purchasing generic drugs. User experience and performance will be key. We (Timespade) would love to build the platform for you. This would include proper brainstorming, UI/UX designing, development, thorough testing, and optimising it on regular basis for success.
If you’re interested, let’s get on a no-strings-attached, discovery call and discuss doing it together 🙂
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