Online Pharmacy Players Set Sights Beyond Delivering Medicines

April 4, 2024

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Bangladesh’s fledgling online pharmacies have set their sights beyond merely delivering medicines.

Starting with on-demand medicine delivery, a number of online pharmacy players are now aiming to become ‘full-stack’ healthcare service providers offering an array of medical products and services, from online doctor consultations to at-home diagnostic testing.

A new whitepaper by the Center for Enterprise and Society at the University of Liberal Arts Bangladesh and Future Startup, an entrepreneurship knowledge and research platform, examines the strategies and challenges confronting these online pharmacies.

The initial premise is straightforward: Leverage an existing customer base cultivated through online medicine sales to cross-sell related products and services such as doctor bookings, consultations, and lab tests.

The idea is that the customers who buy medicine from you will also purchase other healthcare services and vice-versa. In many instances, online pharmacy players do need to expand into adjacent services such as virtual consultation, online appointment booking, at-home diagnostics, etc due to strategic reasons. Investments in Bangladesh’s health-tech startups saw steady growth over the last several years. Between 2015 and 2023, healthcare startups in Bangladesh raised $32 million in disclosed investment. 

Major online medicine delivery players and their presence in related healthcare verticals

This includes investment raised by top healthcare companies such as Praava Health as well as online medicine delivery startups Arogga, MedEasy, and Shombhob Health.

While online medicine delivery as a business faces significant cultural and market challenges, several factors are driving a strong online pharmacy market thesis in Bangladesh, including a generational shift in consumer behavior towards digital shopping, a growing internet and mobile penetration, the government’s focus on digitization, a highly underdeveloped healthcare sector that needs more and better service providers, growing urban dual-income families who are increasingly time-poor and embrace any chance of convenience, etc.

The demand for better healthcare is expected to accelerate as the population demographic of Bangladesh changes over the next few decades. For instance, only 5.4% of the total Bangladesh population was above the age of 60 years in 1990. That number is expected to reach 21% by 2050. An aging population means the rise of various chronic and non-communicable diseases. All these factors are contributing to the rise of services like online pharmacies.

Expansion Has Both Upsides and Downsides

As we mentioned earlier, healthcare is an integrated service and offers an opportunity to expand into adjacent services. People who need medicine may also need doctor consultations, lab tests, and so on. It does make sense to expand into these other services using the existing base of your customers.

Moreover, online medicine delivery startups also face competition from many digital and traditional healthcare companies who are tiptoeing into the vertical, creating a new competitive dynamic for online medicine delivery players. Expanding into relevant verticals can help many of these players to build strategic moats.

Similarly, many of online medicine delivery companies are venture-backed and have pressure from stakeholders to reach certain growth numbers, which can sometimes also work as an impetus for expanding into a new vertical in the hope that it will bring a new wave of growth.

However, expansion into new verticals is always tricky and involves new questions and challenges. Healthcare is a complex service. Successful execution in any of these verticals will not be easy and will come with its challenges.

Furthermore, the viability of this integrated healthcare services model hinges on vigilantly guarding consumer trust. Any lapses in building and maintaining this trust could rapidly derail the credibility of these online pharmacies. Expanding prematurely can make this even more challenging. One approach to expansion that usually works is building sequentially — building a dominant business in one vertical and then moving into another.

By all means, online pharmacy is a nascent market in Bangladesh. However, there is a meaningful opportunity in the vertical if the players in the space evolve with the demands of the market and offer meaningfully differentiated services. For many players in the vertical, treating core consumer needs first will pave the surest path toward emerging as the next big integrated healthcare play. Contrarily, overextending prematurely could upend not just individual firms but create credibility challenges for the entire fledgling industry.

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