Wednesday January 22, 2020

E-Pharmacies to Grow to $3.7 Billion by 2022: CLSA

The Indian pharma market is valued at $20 billion and has been growing at 10-12 per cent

0
//
E-Pharmacies
According to CLSA, there are several E-Pharmacies operating currently but Netmeds, Pharmeasy, Medlife and 1mg have emerged as the key players with a pan-India reach. Pixabay

E-pharmacies are likely to grow seven times to $3.7 billion by CY22 as they aim to grab a large pie of the highly fragmented Indian market, according to a research note by foreign brokerage, CLSA.

The brick and mortar chemists have been protesting against the business models of online pharmacies and have gone on strike several times.

The Indian pharma market is valued at $20 billion and has been growing at 10-12 per cent. Continuation of current growth trends could propel the market to $35 billion by 2025, the report noted.

However, the distribution channel of the pharmacy market in India is highly unorganised and fragmented with over 80,000 distributors and more than 0.85 million brick and mortar retail outlets allowing room for organised and online pharmacies.

E-Pharmacies
The Indian market of E-Pharmacies is valued at $20 billion and has been growing at 10-12 per cent. Pixabay

According to CLSA, there are several e-pharmacies operating currently but Netmeds, Pharmeasy, Medlife and 1mg have emerged as the key players with a pan-India reach. Apollo Pharmacy with 3,500 stores is the largest offline pharmacy and is also piloting an e-pharma portal. These companies have cumulatively raised close to $400 million since starting out.

As per Frost and Sullivan, e-pharmacy is a nascent market worth $0.5 billion, but it is expected to grow nearly 7 times at 63 per cent compounded annual growth rate (CAGR) to $3.7 billion by 2022, riding higher internet penetration.

At present, e-pharmacies largely cater to subset of the chronic market (cardiac, diabetes where drugs purchases can be planned) and their penetration of the acute market has been tough.

Deep discounting and large promotional spends have been drivers of customer acquisition and sales growth. Most e-pharmacies are burning close to Rs 70-80 million per month and this is largely being funded by private equity money, the report noted

E-Pharmacies
At present, E-Pharmacies largely cater to subset of the chronic market (cardiac, diabetes where drugs purchases can be planned) and their penetration of the acute market has been tough. Pixabay

With draft guidelines for regulation of e-pharmacies issued, formalisation of the space on issue of final guidelines may also be an enabler for growth for these companies.

E-pharmacies currently comprise only 2-3 per cent of the India pharma market and thus have limited bargaining power while sourcing from the manufacturer.

ALSO READ: Emissions Trading Scheme in Surat Cuts Pollution, Hikes Profit

“Once e-pharmacies are able to garner 10-15 per cent share of the market, they are likely to have better bargaining power and could then be able to capture a larger pie of margins. Automatic substitution of doctor prescription to unbranded generics (Gx) could be a game changer for e-pharmacies. This may be possible once India enforces uniform quality standards,” CLSA said in the note. (IANS)

Next Story

Here’s how Climate Change has Affected the Economy

Climate vs. Economy: Four Lessons From a Year of Reporting

0
Climate economy
People attend a climate change protest in Brussels, Belgium. VOA

Does fighting climate change mean wrecking the economy?

That’s the question my editor posed to me about a year ago. It has been the focus of my reporting ever since.

The rhetoric from climate change skeptics suggests it would. President Donald Trump has made canceling Obama-era greenhouse gas regulations a central part of his tenure. Economic rationales are always front and center.

Meanwhile, Democratic presidential candidates say they will create millions of jobs by transforming the energy system to carbon-free sources.

Climate economy
A graph depicting how the economy is growing in Massachusetts despite the climate change. VOA

Job killer or job creator? Leaving aside for the moment the fact that climate change is already imposing enormous costs that are only becoming worse, I went looking for answers in Massachusetts, Wyoming and Colorado.

Here’s some of what I learned. It’s not simple. And much remains to be seen.

1. Where steps have been taken, the economy has kept growing. 

Take Massachusetts, for example. The Bay State passed the Global Warming Solutions Act in 2008, calling for an 80% reduction in greenhouse gases from 1990 levels by 2050. Massachusetts requires power plants to pay for their carbon dioxide emissions. The state was among the first to require power companies to generate a certain portion of their electricity from renewable sources. The government offers rebates and incentives for renewable energy, energy efficiency, electric vehicles and more.

Greenhouse gas emissions have come down by 17% from 2008 to 2017 in the state.

Meanwhile, Massachusetts’ economy has continued to grow. The state’s total output went up by 19% in that period, outperforming U.S. economic expansion as a whole by 3% in that time frame.

Employment went up in Massachusetts by 9%. The state has invested in growing a clean-energy economy. Jobs in renewable energy, energy efficiency and related areas have grown by 86% since 2010 and now make up more than 3% of the state’s workforce.

It’s hard to know, though, to what extent the state’s climate policies were responsible for either the greenhouse gas reductions or economic growth. From 2008 to 2017, carbon emissions went down in every state but six: Idaho, Nebraska, North Dakota, Mississippi, Texas and Washington. GDP shrank in just four states: Connecticut, Louisiana, Nevada and Wyoming.

That’s largely because cutting carbon has become much easier to do with the rise of natural gas and renewable power.

2. Some of the most significant greenhouse gas reductions have happened not because of state policies but because of dramatic shifts in energy markets.

Climate economy
Wind turbines produce green energy in Nauen near Berlin, Germany. Stephan Kohler, who heads the government-affiliated agency overseeing Germany’s electricity grid. VOA

The biggest factor lowering carbon dioxide emissions nationwide is that natural gas has replaced coal as the main fuel for electric power plants.

Burning natural gas generates the same amount of energy with half the carbon dioxide emissions as coal. The price of natural gas has plunged as drilling technology has made the United States the world’s leading producer. That has helped drive a wave of fuel-switching at power plants across the United States. Coal generation fell 40% from 2008 to 2017, while natural gas climbed 47%.

Renewable energy is growing quickly, but it still makes up a small portion of the power supply. Wind generated just 6.5% of the nation’s electricity last year. Solar produced 2.2%.

Wind and solar are starting to give fossil fuels serious competition, though. After dramatic cost declines over the last decade, these sources are now significantly cheaper than coal and often cheaper than natural gas, even without subsidies.

They need to replace fossil fuel generation much faster, however, in order to take a serious bite out of emissions.

3. Some good jobs are going away. Dealing with the changes is not easy.

Powering the nation is not the job it used to be. Coal once generated more than half the nation’s electricity. Coal mines and power plants are mostly unionized. The jobs pay well and provide good benefits for workers without a higher education.

Coal mining, however, employs 42% fewer workers than in 2011. More than 300 coal-burning power plants have closed or are slated to be shuttered.

There are growing opportunities in renewable energy and energy efficiency. The solar industry employed 242,000 people in 2018, for example, about 45,000 more than the coal industry.

The jobs are not equivalent. Many solar installation jobs are not unionized, don’t pay as well and have fewer benefits than those for people working at coal plants. And a solar farm doesn’t need many workers once it’s built, while a coal plant can steadily employ hundreds.

Workers hurt by the energy transition are a small part of the overall economy. But coal mines and power plants tend to be in rural areas without much else in the way of industry. When these jobs go away, the pain is localized but intense.

Some policymakers are trying to blunt the impacts. Last year, Colorado was one of several states that passed laws aimed at cutting greenhouse gas emissions and included provisions for a “just transition” — job retraining, economic development aid and other measures to help workers and communities find a life after fossil fuels.

Climate economy
Members of the European Parliament vote in favor of the Paris U.N. COP 21 Climate Change agreement during a voting session at the European Parliament. VOA

4.  No one is doing enough. 

The plunge in coal-fired power helped the United States cut its emissions by an estimated 2.1% in 2018. Since 2005, emissions are down 12.3%.

But the United States pledged to cut greenhouse gases at least 26% by 2025 under the U.N. Paris climate agreement. Emissions must go down by 2.8% per year on average to hit that target. It’s not impossible, experts say, but it’s a stretch.

The Trump administration is moving policy in the opposite direction, aiming to weaken fuel economy standards for vehicles, approving construction of a new oil pipeline from Canada and vowing to shore up America’s coal industry.

Meeting the Paris pledge is not enough, however. Scientists say the world needs to get to zero carbon emissions by 2050 to stave off a climate disaster. Almost no one is on track to do so.

Unless cost-effective carbon capture technology appears soon, natural gas will have to go. Transportation, the largest source of U.S. greenhouse gases, will have to go electric (or hydrogen or biofuel) much, much faster than it is. And someone will have to figure out what to do about emissions from energy-intensive industries like glass, steel, aluminum and concrete.

Also Read- People with Inadequate Food Access Likely to Die Prematurely: Study

Does fighting climate change mean wrecking the economy? Not necessarily. But the steps taken so far will not stop the climate impacts we’re already seeing from becoming much worse.

Can we stop climate change before it’s too late? No one has all the answers yet.

But something must be done. Each new climate-related disaster shows the cost of inaction is mounting.  (VOA)