Pharmeasy Business Model: How Does It Make Money?

In this article, we will shed light on the “PharmEasy Business Model” and will also explain its numerous revenue sources. 

PharmEasy is a leading online pharmacy that is significantly contributing to the modernization of healthcare in India. It connects patients with local pharmacies and diagnostic centers. The founders- Dharmil Sheth and Dhawal Shah created this company with the aim to make healthcare widely accessible in India. Do you know it earned a massive revenue in FY 22 i.e. Rs.5729 crore? But how does it make money just by delivering medicines? Not only that but also it gained “unicorn” status within six years of establishment. All of this has been possible due to its unique and productive business model! 

Here the explanation begins.

PharmEasy: A Brief Overview

Before exploring the PharmEasy business model, let’s have a quick overview of the company.

The three key pillars of the PharmEasy business model are-

• Working Strategy
• Revenue Sources
• Marketing Strategies

Working Strategy: How does it work?

PharmEasy operates through its user-friendly website and mobile app, which allows users to easily upload prescriptions, browse and order medicines, and book lab tests and diagnostics services. The platform provides a seamless and convenient experience for users to access healthcare services online. 

1. Partnerships with Pharmacies

This is the prime work of a medicine aggregator company. You must be aware of how food delivery apps like Zomato or Swiggy work i.e., through partnerships with multiple restaurants and cloud kitchens. Just like that PharmEasy works too but through partnerships with local Pharmacies, pharmaceutical companies, and diagnostic centers.

It has a wide network of local pharmacies and diagnostic centers as its partners. Currently, it has over 800+ partners who help millions of families avail of quality healthcare. These partners fulfill the orders and services requested by users on the platform. PharmEasy carefully selects and collaborates with trusted partners to ensure reliable and quality healthcare services.

2. Inventory Management

Being a medicine delivery company, it needs to maintain a robust inventory management system. So that it can ensure an adequate supply of medicines and healthcare products. Therefore, apart from pharmaceutical companies, PharmEasy also partners with distributors to source authentic and genuine medicines. Thus, it manages its inventory efficiently to keep the medicines in its stock and to prevent delays in deliveries.

3. Prescription Verification

Can you purchase sleeping pills from a pharma store without a prescription? Obviously not because a valid prescription is compulsory to purchase certain drugs/medicines. So, are you planning to purchase it from online pharma companies like PharmEasy? To your disappointment, let me tell you that you won’t be able to purchase it here either! Why? Because in PharmEasy you need to verify your prescription! PharmEasy follows a strict process to verify the prescriptions uploaded by users to ensure compliance with applicable laws and regulations. 

Trained pharmacists review and validate the prescriptions before processing the orders. This process helps in ensuring that users receive the correct medicines as per their prescriptions.

4. Delivery Logistics

Now coming to the delivery part. This is where the essence of e-commerce resides. PharmEasy has a strong delivery network with numerous delivery partners. This network ensures timely and reliable delivery of medicines and healthcare products to your doorsteps. It uses its in-house fleet of delivery personnel, as well as third-party logistics partners, to efficiently manage the last-mile delivery process.

5. Steps Involved

Step 1: Verification of Prescription

First of all, you need to upload the prescription. The officials of PharmEasy will verify it based on the specific criteria of the company. Thereafter, they will send it to the nearest pharmacy in your area.

Step 2: Collection and Packaging of the Medicine

The delivery agent collects and validates your prescription at the pharmaceutical store. Thereafter, the pharmacist gathers the required medicines. In case, the prescribed medicine’s brand is not available then the pharmacist will call you to convey to you the substitutes available. Then, the medicine is packed and sealed in a special PharmEasy package.

Step 3: Medicine Delivery

This is the final step where the delivery agent collects the package (medicine) and delivers it to your doorstep. You can pay for the medication either online through the app or via COD (Cash on Delivery).

You can share your experience on their site. PharmEasy offers multiple channels for customer support, including chat, phone, and email, to address user queries, resolve issues, and provide assistance throughout the order and service process.

6. PharmEasy Plus Subscription

PharmEasy offers a subscription-based model called “PharmEasy Plus,” which provides additional benefits to users. This subscription model helps in generating recurring revenue and building customer loyalty. You will get the following benefits through it-

• 5% additional cashback on all medicine/healthcare orders
• 10% cashback on diagnostic orders
• Free doctor teleconsultation
• Free delivery on health care orders above certain prices
• No extra fee for orders
• Special discount offers

This subscription-based service helps in the creation of a loyal user base.

7. Acquisitions

As of now, PharmEasy acquired three giant companies viz.-

• Thyrocare (2020)
• Aknamed (2021)
• Medlife (2020)

These acquisitions were a major part of PharmEasy business model. PharmEasy had solid reasons to acquire these companies. To reduce completion in the industry as well as to expand its presence in the lab testing space. Medlife was a competitor of PharmEasy but it was at a huge loss. To have better revenue loss ratios, it merged with PharmEasy. Also, Thyrocare is the biggest diagnostic test laboratory in India. Acquiring it helped PharmEasy to establish its presence in the diagnostic space.

Revenue Sources

How does PharmEasy make money? This may be the most banging question in your mind. PharmEasy Business Model includes diverse revenue sources. Do you know PharmEasy earned a revenue of INR 5,729 crore in the financial year 2022? We have described the revenue sources below. 

1. Commission

The margins or commissions on medicines and diagnostic services are the major revenue sources of PharmEasy. It charges a commission on every medicine that it sells on its platform. Also, it earns a percentage of the transaction value as a commission while sourcing the medicines from its partner pharmacies. Similarly, it earns the commission fee on Lab tests and diagnostic tests whenever you book these services on PharmEasy’s platform.

2. Advertisements

This is the second source of PharmEasy’s revenue. It allows pharmaceutical companies, healthcare providers, and other businesses to promote their products or services on its platform. It advertises them through sponsored listings, banners, suggestion lists, and several other advertising formats. Those businesses pay certain prices to advertise their products on PharmEasy’s platform. Thus, these promotions generate advertising revenue.

3. Subscriptions

As you have read above, PharmEasy provides premium services by charging a certain amount of fee. To utilize the benefits of premium services, you need to pay a subscription fee for PharmEasy Plus. This generates recurring subscription revenue for the company.  

4. Other Sources of Revenue

• Delivery fees 
• Selling lab tests.
• Sale of fitness and drug equipment.
• Sale of healthcare products.
• Lab testing at home

Marketing Strategies

PharmEasy employs the following marketing strategies to reach its target audience as well as to promote its services-

1. Television Commercials- Bhatak Nritya

In spite of being a conventional advertising method, television commercials are best to grab the attention of the Indian audience. PharmEasy effectively utilized this fact to create a commercial that caught the attention of the viewers. It created a TV ad named “Bhatak Nritya” by incorporating its slogan “Take it easy PharmEasy.” Also, its soundtrack got high viewers’ attention. When they found the ad interesting, they explored more about the app. This led to a healthy conversion of the audience into customers.

2. Meme Marketing

Meme marketing is the latest trend booming in the marketing industry. Memes are another effective way to grab the attention of the audience through jokes or entertainment. PharmEasy posts numerous memes on its Instagram handle by attaching its slogan #TakeItEasy in the tagline.

3. Referral Programs

Do you know you can share your PharmEasy referral code with your friends, family members, or acquaintances? Whenever new users place their order using your referral code, they will get an extra 5% off on their first order. Not only that. You will also get an extra 5% off on your next order. These referral programs are efficient marketing strategies. It helps in word-of-mouth marketing too! It can drive new user sign-ups as well as increase customer retention.

Final Words

PharmEasy allows you to order medicines and healthcare products online through its website or mobile app. You can upload their prescriptions, choose the desired medicines, and have them delivered to their doorstep. PharmEasy earns revenue by charging a commission or margin on the medicines sold through its platform. Apart from that it makes money from various revenue sources too! Also, its digital marketing techniques, loyalty programs, and referral programs have aided in promoting the brand. Thus, the PharmEasy business model played a crucial role to achieve the heights of success in the online pharmaceutical industry.