Quick Pharma: Can Zepto, Blinkit, Instamart Cope With The Rules Of The Game?

Does it feel at times that Zepto, Blinkit, Instamart will try just about anything under the quick commerce format? Even the slightest hint of a shift in consumer behaviour is often enough for a new launch.

And as the biggest quick commerce companies search for high-margin categories to solve their profitability problem, their next big target is 10-minute medicine deliveries. 

For quick commerce big three – Zepto, Blinkit and Instamart – success in pharma delivery is the next milestone they aim to achieve. The trio is aiming for a 20%-30% slice of India’s $66 Bn pharma opportunity that’s projected to reach $88 Bn by 2030. 

While Instamart was a first-mover in the medicine delivery segment, making its foray late last year, Blinkit and Zepto caught up with the trend with prescription medicines, besides OTC drugs. What sets the three companies different from each other is their strategy. 

But unlike dedicated players such as Plazza, these 10-minute medicine delivery players are currently still exploring the periphery of this segment. None of them has ventured deep into the pharmacy supply chain yet and therein lies a big challenge for the 10-minute medicine delivery market.

The Pharma Map For Zepto, Blinkit And Instamart

Swiggy-owned Instamart announced a partnership with fellow Prosus portfolio company Pharmeasy for medicine procurement and prescription verification. Eternal’s Blinkit, insiders claimed, is moving to own pharma SKUs and have in-house prescription verification to go beyond OTC.  

Further, sources told Inc42 that Zepto is hiring licensed pharmacists from Mumbai and Bengaluru to enable 10-minute deliveries for prescription medicines. 

Zepto’s pharma category manager Akash Bhatnagar said in a LinkedIn post that the company will procure all medicines and deliver them directly from its dark stores. “This approach ensures that quality and authenticity remain fully under our control,” he wrote, but it’s not clear where the company is procuring its medicines from. 

“With an AOV (average order value) of over INR 1,000 in this class of medicines against an AOV of INR 600 in groceries, medicines can be a good margin addition for existing quick commerce platforms,” Alok Chawla, who founded Kiko Live to help retailers and pharmacy chains adopt quick commerce channels, told Inc42. 

In a market laden with compliance burdens, strict regulatory checks and cost-overhauls, this move, according to industry stakeholders, can disrupt the local pharmacy sector to some extent. 

This set off an alarm for medicine retailers. Days after Zepto announced the entry into medicine delivery, the All India Organisation of Chemists and Druggists (AIOCD) wrote to the home ministry calling for a ban on 10-minute medicine deliveries.

Inc42 spoke to company sources and industry analysts to look into the playbooks of Zepto, Instamart and Blinkit as they compete to grab a stake in the prescription drug market and combat the regulatory hurdles. While this is what we expect to see in the next few months, the course of these quick commerce platforms may change as the medicine delivery segment evolves and as new competition emerges. 

Rx: Booster Dose For Acquisitions

The real moat in quick medicine deliveries will come from owning the SKUs and medicine supplies as opposed to tie-ups with pharmacies or epharma companies which are merely commission-based models. And while there are some indications that quick commerce platforms are moving in this direction, the procurement / inventory model is not yet clear for all classes of medicines. 

Under India’s Drugs and Cosmetics Act, 1940, selling prescription drugs under various schedules requires licences that could be a challenge for the likes of Blinkit or Zepto in their bid to own inventories or gain control over end-to-end supply chain.

Some non-critical prescription drugs, which are not under price control can offer 10%-20% margins for pharma retailers. The margins grow significantly when looking at generic medicines instead of branded drugs. This allows a lot of headroom for quick commerce companies to activate new users through discounts. 

However, this would require going beyond partnerships. The likes of Zepto, Blinkit and Instamart would want to control licensed entities for prescription verification and pharma supply chain. The potential acquisition drive is complicated regulatory differences across states, which we will come to below. 

Kiko’s Chawla said his conversations with pharmacy chains and quick commerce platforms underscore that the market was ripe for consolidation. He believes quick commerce startups could look to acquire branded and unbranded pharma retail chains which give these platforms readymade, on-premise, licensed pharmacists and other regulatory approvals. 

While experts believe that there is a huge unbranded pharma retail market for quick commerce companies to target, scaling this up would require significant spending on acquisitions and then refitting these stores for 10-minute deliveries. This could be one growth bottleneck. Pharma retail or drug licences are tied to a specific premises, and each new store in a chain will be inspected and approved individually.

Like in the case of dark stores today, Blinkit, Zepto and Instamart will have to constantly assess their profitability per pharma store. But unlike dark stores, shutting these pharma stores will not be as easy as packing up a dark store given the up front costs involved and the regulatory overheads.  

Diagnosis: Logistical Complexities 

On the supply front, quick commerce dark stores could be repurposed for medicine deliveries or colocated with pharmacies to shorten the fulfillment time and edge out existing epharmacies. There are greater complexities in the supply chain and storage of life-saving and sensitive prescription drugs, but neither Zepto nor Blinkit is looking to venture into this area at the moment.

Like we mentioned earlier, acquisitions may unlock margins, economies of scale and reduce dependency on wholesalers, but QC platforms also need to solve supply chain challenges in pharma.

“Right from the dark store level to the sale of medicines – each step in the pharma business involves compliance-related burdens and that’s why it is such a difficult business to crack,” Swarup Bose of Celcius Logistics, which recently launched CelciusPlus as a pharma supply vertical, told Inc42. 

“More than selling medicines, how they are storing the medicines, which contract manufacturers they are working with, even classification for generic and branded medicines – each of these steps require compliance,” he added. 

In fact, most prescription medicines are required to be stored at a consistent temperature, which is difficult to achieve all the time under Indian weather conditions, especially in a typical dark store. This is another challenge that the quick commerce companies will encounter as they scale up. 

Because of adherence to the strict protocols, the current crop of epharma companies like Tata 1 Mg, NetMeds and Apollo Pharmacy have not rushed to quick deliveries and still promise slotted deliveries which could be same day or next day. Their reticence in launching 10-minute medicine deliveries should clue the market in on why this segment is more challenging than it looks. 

Prescription verification or doctor consultations when a user wants to buy Schedule H or X drugs could be another pain point for the 10-minute delivery format, and this is where most pharma retailers have an edge over digital-only platforms.  

“Internally, we have been testing AI tools for faster prescription verification, however, the health industry runs on trust that needs human intervention across multiple touch points, particularly consumer-facing roles. Unlike groceries, pharma sales rely on customer support teams to understand the dosage, ingredients and the availability of various brands,” he added.

Complaints: Regulatory Roadblocks

Besides the cost overheads, compliance too inflates the financial burden on quick commerce companies.

The existing laws call for retail pharmacy registration and presence of a qualified pharmacist on the premises responsible for dispensing, while epharmacies are expected to keep clear records of medicine sales, especially for Schedule H1 Drugs. This is overseen by both the Central Drugs Standard Control Organisation (CDSCO) and state regulatory authorities. 

Regular monitoring and checks are done by state and central government authorities on the way drugs are stocked and sold. Players in 10-minute medicine deliveries need to invest heavily to ensure that all state and central regulations are adhered to. 

Owning the pharmacy retail licence can reduce certain legal frictions but does not eliminate the heavy cost of compliance, audits, pharmacist payrolls, security and special warehousing challenges. Plus, each retail out 

Celcius’ Bose warned that all these costs will eat away the margins that companies could earn unless they sell in large volumes. 

Non-SOS: Regular Prescription Drugs

While quick commerce companies aim for a small slice of the prescription drugs market, pharmacist groups are already concerned about what this means for their business. 

Since 2020, there has been a significant hue and cry over online pharmacies entering the medicine delivery space with many pharma retailer bodies claiming these companies are operating without adequate licences. 

“Prescription medicines are typically ordered from a pharmacy in one’s vicinity. But in the past few years, some of these orders have started shifting to epharma companies. This is not just about delivery convenience but also about the discounts offered by epharmacies,” Chawla of Kiko Live said.

Retail pharmacies rarely take such a big hit on their margins. With quick commerce gunning for pharma deliveries now, the problem of discounts-led customer acquisition and quicker deliveries will not just worry pharmacy stores but also existing players like 1MG, PharmEasy, Apollo 24X7 and others. 

Bose pointed out the quick commerce edge in manpower deployment for deliveries – something that the above epharmacies cannot match yet. 

“I think ecommerce companies have got a leg-up over 1MG and Apollo 24×7 because their network is much better and it’s ready. They’ve got the riders ready, they’ve got the dark stores ready. But how they bring the alterations to solve the challenges which epharma players face will be interesting to watch out for.”  

Can Quick Commerce Follow The Rules?

 

While the industry is abuzz with how the new age of pharma deliveries through quick commerce,  we expect more pushback from pharmacist and chemist organisations given the  overarching regulatory influence in medicine sales. 

The lobby against 10-minute medicine delivery has started calling for a ban on quick commerce supplying prescription drugs, arguing that it would trigger a rise in fake prescriptions and oversight in consultations or deep discounting which would eventually destabilise the industry.

For the quick commerce platforms, 10-minute medicine delivery is an audacious bet. Regulations, supply chain and licences will be the key success factors in making pharma deliveries profitable for quick commerce giants.

Interestingly, in their short four-year journey so far, quick commerce operations have not had to grapple with regulators and stringent rules.

Quick medicine delivery platform Plazza’s founder Aman Priyadarshi earlier told Inc42 that having a mixed focus on grocery and medicines is perhaps not ideal.

“It’s like in the real world, even a large kirana outlet will not have the bandwidth and workforce to manage pharmacy operations in the same space. You will need a more knowledgeable and qualified workforce in dark stores and the capacity for over 1.5 Lakh SKUs,” the Plazza founder claimed.

Quick commerce category has epitomised the “move fast and break things” mantra in India since the pandemic. But as many have pointed out that simply does not work for medicine deliveries. How will the likes of Blinkit, Zepto and Instamart actually take up to operating within these limitations?   

[Edited By Kumar Chatterjee]