Why most healthcare start-ups are bleeding

Not many digital healthcare start-up has achieved break-even mainly because of the absence of ‘assisted e-commerce’ in an industry driven mostly by doctors, pharmaceutical companies and their associations.

Slow growth, difficulty in getting all the stakeholders, including consumers, on board, lack of healthcare mentors and medical professionals have made it difficult for these start-ups to take off.

Deepak Tomar, Founder of HeyCare, told BusinessLine: Most healthcare start-ups have turned out to be just e-commerce players selling medicines and other healthcare products, some with discounts. “E-commerce’s success is based on the availability of cheaper and/or branded products. However, the healthcare segment is different from other sectors. No buyer wants to play with health and buy cheaper or generic medicines unless recommended by the doctor,” he said.

Due to this obstacle, most healthcare start-ups are bleeding financially. “Put together, the three-four major healthcare start-ups are getting a meagre 8,000-10,000 orders for medicines per day and 15,000-20,000 orders per day in the case of over-the-counter (OTC) products.”

India’s e-commerce market is expected to grow from $160 billion in 2017 to $500 billion in the next seven years, according to a CII-KPMG report. Of this, 26 per cent is predicted to be in the healthcare sector. “But at present, our market is not even one per cent of it. Only an assisted sales campaign, offering replacement of expensive branded medicines/healthcare products by generic ones, can make healthcare start-ups succeed. Moreover, healthcare products need to be delivered within hours, where the B2B2C model can succeed.”

HeyCare, Tomar said, has evolved both B2B and B2C models and is working on the B2B2C model. “We have tied up with pharmacies as well as customers and offer generic medicines as well as part of assisted e-commerce to make it easy for the buyer. Unless generic products turn popular, e-commerce in healthcare sector cannot sustain. Doctors and pharmacies can help in it immensely and make us find loyal customers.”

Unlike other e-commerce products, he said, we need both digital and physical presence. “Although 50 per cent of India’s GDP is accounted for by the rural population, 96 per cent of Indians are still out of the e-commerce network.

Backed by substantial funding and evolving technology, healthcare tech platforms did come up in India, emphasising the need for making healthcare facility accessible to all. Even though the majority of the healthcare platforms started monetising their venture, achieving break-even seems distant for most of them.

He said players like Practo and Lybrate, which addressed the problems of healthcare delivery through technological innovations, succeeded but this is not easy for new entrants to get there. In India, at present, NedMed, PharmEasy, and Healthians are some of the major start-ups in healthcare segment.