One
of the characteristics of the fast-growing healthcare industry is high degree
of fragmentation. Of the ~750 medical device manufacturing companies in India,
~65% have a turnover <US$ 2M and only 10% of the companies have a turnover
of more than US$ 10M.
While
pharmaceuticals are relatively more organized, it also has a longer tail, which
has ~ 800 companies with <US$ 2.5M revenues but accounts for just ~8% of the
overall domestic pharma market size.
These
small-scale companies have limited resources to make their presence known and
deepen their reach.
In
addition, increasing cost and margin pressures are likely to drive hospitals
and pharmacies to seek better prices through product choices, better
negotiations, and supplier consolidation.
There
are many B2B platforms that have emerged which are trying to address these
issues. This newsletter outlines three aspects – what customers seek from these
platforms, barriers to adoption, and the value that the suppliers seek.
Presenting
a quick snapshot of the e-commerce market of healthcare and medical devices.
Purchasing
medical supplies online can be rather daunting. While price, TAT and technical
know-how are important selection criteria for the buyers, the reputation of the
medical supplier or manufacturer is extremely crucial as well.
Despite
offering numerous advantages of B2B e-commerce in the healthcare industry, the
field also presents certain challenges. Longer delivery time than the local
distributors is the biggest detractor among the buyers of the medical supplies.
Online
channels help in expansion of market reach especially beyond Metro/Tier-1
cities for healthcare suppliers. They provide deeper distribution reach to Tier
2/3/4 cities. Online channels ensure reduced inventory and logistics cost, thus
helping them in spending less and selling more to enable customer acquisition
at reduced cost.