Why Investors Just Bet $85m On This Indian Company’s Generic Drug Strategy

With over 400 cardinal chronic patients, India is 1 of nan world’s largest medicine markets. But while astir e-pharmacies pursuit speed, affordability remains nan existent challenge. Truemeds took a different route: helping patients move to lower-cost substitutes, a stake now paying disconnected pinch caller backing astatine astir 4 times its erstwhile valuation.

The six-year-old startup has raised $85 cardinal successful a caller information that includes $65 cardinal successful superior and $20 cardinal successful secondary backing led by Accel, on pinch information from Peak XV Partners. TechCrunch first reported connected Accel’s talks to backmost Truemeds past year. Existing investors WestBridge Capital and InfoEdge Ventures, besides participated.

The caller information has boosted Truemeds’ valuation to complete $400 million, up from nan $110 cardinal successful its past information 2 years ago.

Founded successful 2019, Truemeds entered nan marketplace astatine a clip erstwhile India’s online drugstore abstraction was already crowded pinch awesome players offering steep discounts connected branded generics. But immoderate of those companies struggled to prolong early momentum — Prosus Ventures-backed PharmEasy, for instance, saw its valuation drop from a highest of $5.6 cardinal to nether $600 million, while 1mg was acquired by Tata Digital, portion of nan Tata Group. Instead of competing head-on, Truemeds’ founders chose to attraction connected a comparatively niche segment: generic medicines.

“There is nary measurement to amended nan personification that you tin person much affordable options if you can’t spend these drugs,” said Truemeds co-founder Akshat Nayyar (pictured above, left) successful an interview. “That is wherever we felt that cipher successful nan worth concatenation was moving towards that, and we tin span that gap.”

The Mumbai-based recommends generic alternatives to consumers for nan branded medicines they need. This yet helps consumers prevention money, arsenic generic narcotics are typically much affordable than their branded versions owed to costs efficiencies successful their improvement process.

Truemeds says its differentiated attack has paid off, pinch gross increasing complete 66% year-over-year to ₹5 cardinal ($57 million) successful nan past financial year. The startup says it retains much than 15% of its gross aft 12 months and now serves an mean of 500,000 customers each month, pinch a full of 3 cardinal customers to date. Moreover, it says it now serves complete 20,000 postal codes crossed nan country, pinch much than 75% of its customers coming from tier-2 cities and beyond.

However, educating customers astir alternatives to their prescribed medicines — and convincing them to move from branded narcotics to generics — remains a challenge.

“Because you get anchored to your prescribed brand’s price, and erstwhile you abruptly spot a little price, you want to cognize why it is low,” Nayyar told TechCrunch.

Increasing discounts while competitors trim back

While today’s e-pharmacies pursuit velocity complete savings, nan sector’s early playbook was different. Online pharmacies successful India utilized to connection discounts of up to 25% to pull customers. However, Nayyar said this dropped to 20% and past 15% — nan caller mean — arsenic astir burned rate to get caller customers and pivoted to faster transportation arsenic their main differentiator.

Meanwhile, Truemeds has gone successful nan other direction, expanding its mean discounts from 29% to 32% successful nan past 12 months. For an mean personification who switches brands connected nan platform, savings scope 47% connected their medicine, says nan company.

This comes from Truemeds’ heavy procurement relationships pinch pharma companies, wherever nan startup uses its exertion to springiness manufacturers amended request visibility, helping them scheme accumulation much efficiently for upcoming quarters, he said.

The startup besides relies connected its ain logistics successful immoderate of nan awesome cities it operates successful and uses low-cost logistics partners for nan rest.

“We judge that our four-hour transportation exemplary is much than capable from a chronic patient’s perspective,” said Nayyar. “You’re capable to do much planned purchases that way, but we want to do it successful nan astir businesslike manner, and walk much and much discounts to nan extremity personification alternatively than [focus on] nan fastest transportation for that matter.”

Next up: AI-powered customization and doorstep diagnostics

As Truemeds needs to person customers to take generics complete branded medicines, it goes done deeper consultations pinch them. It already conducts 10-12 cardinal consultations per year. The startup has developed an algorithm complete nan years that looks astatine various parameters to precisely propose alternatives to nan branded narcotics a customer demands. It considers nuances specified arsenic whether nan medicine is sugar-coated if it is for a young patient, wherever it is manufactured, and whether nan works is GMP-certified, among others. The startup besides has a chatbot to reside immoderate personification queries quickly.

Much much is connected nan roadmap. The institution plans to create an AI-based strategy that customizes conversations based connected customers’ behaviour and erstwhile interactions pinch generic alternatives. It’s besides opening a Bengaluru agency while dedicating astatine slightest 20% of its superior to engineering and merchandise development.

Beyond medicines, Truemeds is plotting to participate diagnostics done partnerships pinch nationalist pathology labs, readying to aviator laboratory testing services successful immoderate tier-2 cities successful nan adjacent 3 to 4 months.

“The superior ngo remains nan same, which is making healthcare affordable for nan extremity user,” nan co-founder said. “It started pinch medicines. Now that nan exemplary is getting established, we are going to support scaling that. Simultaneously, we besides want to spot if we tin do thing akin connected nan diagnostics front, wherever we tin beryllium nan lowest costs supplier of astatine slightest nan astir communal tests.”

The startup besides plans to summation its fulfillment halfway count by 300% — from 19 presently — complete nan adjacent 12 months, aiming to deepen its beingness successful existing markets.

Before this round, Truemeds raised $50 cardinal and still has 30–35% of that superior successful nan bank, Nayyar said.

The startup has a workforce of 2,800 people, pinch 250 based successful its Mumbai office.