With over 400 million chronic patients, India is one of the largest medical markets in the world. But while most e-pharmacies are chasing speed, affordability remains a real challenge. Truemeds took a different route. Help patients switch to lower cost alternatives. This is paying off the new funds at about four times the previous valuation.
Six years ago, the startup raised $85 million in a new round, with participation from Peak XV Partners, which includes $65 million in primary and $20 million in secondary funds led by Accel. TechCrunch first reported on Accel’s speeches that backed up Trueemeds last year. Existing investors Westbridge Capital and Infoedge Ventures also participated.
The Fresh Round has raised the Truemeds’ valuation to more than $400 million, from the $110 million in the final round two years ago.
Founded in 2019, Truemeds entered the market when India’s online pharmacy space was already crowded and major players were offering rapid discounts on brand generics. However, some of these companies struggled to maintain their early momentum. For example, Pharmeasy, supported by Prosus Ventures, has dropped its valuation from $5.6 billion to less than $600 million, while 1MG was acquired by Tata Digital, a part of the Tata group. Instead of competing head-on, the founders of Truemeds chose to focus on generic drugs, a relatively niche segment.
“If you can afford these drugs, there’s no way to educate users that you can have more affordable options,” said Akshat Nayyar, co-founder of Truemeds co-founder Akshat Nayyar (pictured above, left), “There’s no way to educate users that if you can afford these drugs, you can fill that gap. “It’s where I felt that no one in the value chain was working towards it.”
Based in Mumbai, we recommend general alternatives for consumers for branded medicines they need. This allows consumers to save money as common drugs are usually more affordable than branded versions due to cost-effectiveness in the development process.
Truemeds said its differentiated approach paid off, with over 66% up from the previous year to $5 billion ($57 million) last year. The startup has held more than 15% of its revenues after 12 months and currently serves an average of 500,000 customers per month, with a total of 3 million customers so far. Additionally, it currently offers over 20,000 postcodes nationwide, with over 75% of its customers saying they come from Tier-2 cities and beyond.
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However, educating customers about prescribed drug alternatives and convincing them to switch from branded drugs to generics remains a challenge.
“Because it’s fixed at the price of a prescribed brand, and if you suddenly see a low price, you want to know why it’s low,” Nayyar told TechCrunch.
Increase discounts while competitors are cutting
While e-pharmacies today chase speed rather than saving, the early playbooks of the sector were different. Online pharmacies in India were offering up to 25% discounts to attract customers. However, Nayyar said this had dropped to 20%, with 15% (new average) burning cash to attract new customers and challenging faster delivery as the main differentiator.
Truemeds went in the opposite direction, increasing its average discount from 29% to 32% over the past 12 months. For the average user who switches brands to the platform, savings amount to 47% of the drug, the company says.
This stems from its deep sourcing relationship with Truemeds’ Pharma Companies. The company will help startups use technology to improve demand visibility to manufacturers and plan production more efficiently for upcoming quarters.
The startup also relies on the unique logistics of several of the major cities it operates, using low-cost logistics partners for the rest.
“We believe our 4-hour delivery model is more than sufficient from the perspective of chronic patients,” Nayyar said. “You can make a purchase that is planned like that, but we want to do it in the most efficient way and give the end users more and more discounts (focused) to the fastest delivery in that respect.”
Next: AI-powered customization and entrance diagnosis
Truemeds has experienced deeper consultations with them as they need to persuade their customers to choose generics over branded medicines. We have already held 10-12 million consultations per year. The startup has developed algorithms over the years that explore different parameters to accurately suggest alternatives to brand drugs that its customers demand. It takes into account nuances such as if it is a young patient, if it is manufactured, and whether the plant is GMP certified, whether the drug is coated with sugar, etc. Startups also have chatbots to quickly deal with user queries.
There’s more to the roadmap. The company plans to develop an AI-based system that customizes conversations based on previous interactions between customer behavior and common alternatives. It also opens an office in Bengaluru, dedicating at least 20% of its capital to engineering and product development.
Beyond medicines, Truemeds plans to participate in the diagnosis through a partnership with National Pathology Labs, and plans to pilot lab testing services in several Tier-2 cities in the next three to four months.
“The main missions remain the same, and healthcare is affordable for end users,” the co-founder said. “It started with the drug. With the model being established, we will continue to expand on it. At the same time, we would like to see if we can do the same thing in terms of diagnostics that can at least become the lowest-cost provider of testing.”
The startup is also planning to increase its fulfillment centre count from the current 19 by 300% over the next 12 months, aiming to deepen its presence in existing markets.
Before this round, Truemeds raised $50 million, but still has 30-35% of the bank’s capital, Nayyar said.
The startup’s workforce is 2,800 people and has a base of 250 people in its Mumbai office.
