eHealth – The “New Norm” Post Covid
Part I: Indian eHealth at a Tipping Point
Indian ‘eHealth’ sector is at a tipping point, and is projected to grow by ~13x, to become a $16 Bn opportunity by FY 25!
Indian Healthcare sector – A promising $353 Bn opportunity by FY 25
The $135 Bn Indian healthcare industry is at an exciting tipping point, with Indian Govt. prioritizing healthcare as one of the key focus areas for the next few years. The Govt. plans to increase its healthcare spending from the current 1.6% to 2.5% of the GDP until FY 25. There is significant opportunity for improving the healthcare services across the country, especially in Bharat, where penetration of quality and affordable outpatient & inpatient care services is limited.
Moreover, increased awareness levels amongst consumers is further going to drive higher healthcare consumption levels. Driven by the same, the Indian healthcare market will grow at a healthy 17% CAGR and reach $353 Bn by FY 25. This will lead to an overall (Govt. and Private) increase from 4.6% to 7.1% spending on healthcare (as % of GDP) in a span of 6 years. The private spending will witness a ~2.6x increase during this period to reach $228 Billion. This along with $125 Billion government spending, will lead to $255 healthcare expenditure per capita in FY 25, significantly up from the current $99.
‘eHealth’ – The exciting digital use case for the Indian consumer outpatient care!
Healthcare has a complex supply chain, involving multiple stakeholders, primarily suppliers, healthcare providers, consumers and medical insurers. Suppliers include pharmaceutical companies (i.e. drug manufacturers) and equipment manufacturing companies. Providers are broadly segmented into: 1. Outpatient care providers, which include pharmacies, doctors (for consultation) and diagnostic centers. 2. Inpatient care providers, which are basically hospitals that provide all the services in-house. Consumers are the end-users of healthcare, who mostly avail services as a household. Lastly, medical insurers provide financial coverage to consumers and help them avail healthcare services.
The eHealth sector in India is focused on digitizing the interaction between consumers & outpatient care providers, which include pharmacies, doctors and diagnostics centers. These platforms provide consumers with a convenient healthcare experience by offering pharmacy, consultation and diagnostics services online. While e-Tailing horizontals also provide online ordering of OTC & personal care products, eHealth focussed vertical players largely drive the play in this sector. Medlife, 1mg, Pharmeasy, NetMeds, Practo, DocsApp, Medplus and Healthians are some of the leading eHealth players in India. While some of them provide only a single category of eHealth service (out of ePharmacy, eConsultation and eDiagnostics), some of the others provide all the three eHealth services, making them a ‘One Stop Shop’ eHealth integrated solution provider.
Consumers face multiple challenges driven by inefficient processes, higher costs and poor quality of services, as part of their traditional outpatient care journey across pharmacies, doctors (for consultation) and diagnostics centers. However, with eHealth coming into play, it has significantly taken care of the problems associated with the traditional outpatient care journey by providing convenient, efficient, cheaper and good quality services through modern-day technology to healthcare consumers.
eHealth Ready addressable households represent online shopping households that are willing to try eHealth services. Out of the 580 Mn people who have internet access, India has ~135 Mn online shoppers, who translate into 90 Mn online shopping households. As per our detailed consumer surveys, ~65% of such households are willing to try eHealth services, thus providing the 60 Mn base (65% X 90 Mn) of eHealth ready addressable households. Out of these, ~4.3 Mn households currently use eHealth i.e. ~7% of the eHealth ready addressable base of 60 Mn households.
We believe that the eHealth sector will have 3 potential growth scenarios in terms of number of tapped households over the next 5 years.
1. Base Scenario: eHealth will tap 41 Mn households by FY 25, growing at eHealth’s historic 2 Yr. CAGR of 57%.
2. Moderate Scenario: eHealth will tap 57 Mn households by FY 25, growing at eGrocery’s historic 2 Yr. CAGR of 68%.
3. Aggressive Scenario: eHealth will tap 68 Mn households by FY 25, growing at Foodtech’s historic 3 Yr. CAGR of 74%.
60 Mn eHealth ready households are expected to reach 140 Mn by FY 25. This growth is going to be driven on the back of growing the online shopper base, and increase in willingness to try eHealth. As per the 3 growth scenarios as discussed above, this translates to a penetration of ~30 to 50% of eHealth ready household base, by FY 25. eHealth Ready Addressable Market is derived through multiplying average order value (AOV) of outpatient medical purchase and yearly medical purchase frequency with eHealth ready addressable households. After applying the calculations, it is found that eHealth currently has a $11 Bn ready addressable market, out of which only ~11% has been tapped at $1.2 Bn eHealth GMV.
eHealth Ready Addressable Market is derived through multiplying average order value (AOV) of outpatient medical purchase and yearly medical purchase frequency with eHealth ready addressable households. After applying the calculations, it is found that eHealth currently has a $11 Bn ready addressable market, out of which only ~11% has been tapped at $1.2 Bn eHealth GMV.
However, by FY 25, the eHealth ready addressable market is expected to grow to $35 Bn, out of which, 38-55% is likely to be tapped by eHealth players at $11 – 19 Bn annual GMV, driven by the three growth scenarios as detailed earlier. This is despite assuming the same AOV & frequency for eHealth users as the current year (lower AOV / frequency for new users will normalize against higher AOV / frequency for old users).
At ~68% CAGR (moderate growth scenario), eHealth will be able to tap 19% of the total 300 Mn households (57 Mn eHealth households) in India i.e. in the same range as the expected Indian households to be tapped by eGrocery. However, at this extraordinary CAGR, eHealth will clearly outpace other consumer internet sectors in terms of growth.
Part II: eHealth – The “New Norm” Post Covid
Indian eHealth sector was already on a promising trajectory in the pre-COVID world, as elaborated in our report ‘Indian ‘eHealth’ at a tipping point!’ released in Feb 2020. However, during COVID lockdown, the demand for online health services increased significantly, but it didn’t translate as much into business for the eHealth sector, due to considerable supply chain & logistics challenges during the COVID period. Nevertheless, the post COVID consumer sentiment towards eHealth remains quite optimistic, which is expected to translate into long term gains for the sector.
This report covers sector-level insights such as eHealth business models as well as player-level insights such as or related to Practo business model, Pharmeasy business model, Practo revenue, 1MG business model and Pharmeasy revenue, among others.
See: Inside the ReportPart I: Indian eHealth at a Tipping Point
1. Indian Healthcare - The sector poised for sustainable growth!
1.1. India healthcare market size and growth forecasts
1.2. Private vs government spending on healthcare
1.3. Healthcare growth drivers (incl. government initiatives)
1.4. Global benchmarks
2. 'eHealth' - The exciting digital use case for the Indian consumer outpatient care!
2.1. Healthcare value chain
2.2. eHealth value proposition
2.3. eHealth addressable & tapped households
2.4. eHealth household profiles
2.5. eHealth market size & growth estimates
2.6. eHealth market slices by category (prescriptions, OTC, consultation, diagnostics)
2.7. eHealth profitability by category
2.8. Consumer sentiment
2.9. Healthcare supplier & provider sentiment
2.10. Government policies towards eHealth
2.11. Investments in eHealth sector
3. 'Sustainability' of eHealth business models - 'Who will potentially win'!
3.1. RedSeer's definition of eHealth business models
3.2. Business model assessment on multiple levers
3.3. Vertical vs horizontal play
3.4. Integrated vs standalone play (incl. model unit economics)
3.5. Case study: Medlife
3.6. Case study: 1mg
3.7. Case study: Pharmeasy
3.8. Case study: Netmeds
3.9. Innovation & monetization levers
3.10. Omni channel play
3.11. Hyperlocal vs schedule delivery
Part II: eHealth - The “New Norm” Post Covid
1. The Big Picture – COVID-19 impact on India eHealth?
1.1. Pre-COVID view of eHealth
1.2. Impact on eHealth during lockdown
1.3. Category level weekly GMV for Apr-Jun'20
1.4. Industry expert insights
1.5. eHealth unit economics during COVID
2. Consumer sentiment and its implications (Post Covid)
2.1. Consumer spending across sectors
2.2. Online vs offline preference across sectors
2.3. Online vs offline preference for each eHealth category
2.4. eHealth platform selection criteria
2.5. Doctors' perspective on changes in consumer behaviour
2.6. COVID user view on using eHealth in future
3. eHealth post COVID growth jouney
3.1. eHealth post COVID growth drivers
3.1.1. Doctor's perspective on partnering with eHealth apps
3.1.2. Regulatory perspective
3.1.3. Investment landscape
3.2. eHealth FY 21 market estimates by category
3.3. eHealth FY 25 market estimates by category
3.4. eHealth Household growth by city tiers