Why investors just bet $85M on this Indian company’s generic drug strategy | TechCrunch

With over 400 million chronic patients, India is one of the world’s largest medicine markets. But while most e-pharmacies chase speed, affordability remains the real challenge. Truemeds took a different route: helping patients switch to lower-cost substitutes, a bet now paying off with new funding at about four times its previous valuation.

The six-year-old startup has raised $85 million in a new round that includes $65 million in primary and $20 million in secondary funding led by Accel, along with participation from Peak XV Partners. TechCrunch first reported on Accel’s talks to back Truemeds last year. Existing investors WestBridge Capital and InfoEdge Ventures, also participated.

The fresh round has boosted Truemeds’ valuation to over $400 million, up from the $110 million in its last round two years ago.

Founded in 2019, Truemeds entered the market at a time when India’s online pharmacy space was already crowded with major players offering steep discounts on branded generics. But some of those companies struggled to sustain early momentum — Prosus Ventures-backed PharmEasy, for instance, saw its valuation drop from a peak of $5.6 billion to under $600 million, while 1mg was acquired by Tata Digital, part of the Tata Group. Instead of competing head-on, Truemeds’ founders chose to focus on a relatively niche segment: generic medicines.

“There is no way to educate the user that you can have more affordable options if you can’t afford these drugs,” said Truemeds co-founder Akshat Nayyar (pictured above, left) in an interview. “That is where we felt that nobody in the value chain was working towards that, and we can bridge that gap.”

The Mumbai-based recommends generic alternatives to consumers for the branded medicines they need. This eventually helps consumers save money, as generic drugs are typically more affordable than their branded versions due to cost efficiencies in their development process.

Truemeds says its differentiated approach has paid off, with revenue growing over 66% year-over-year to ₹5 billion ($57 million) in the last financial year. The startup says it retains more than 15% of its revenue after 12 months and now serves an average of 500,000 customers each month, with a total of 3 million customers to date. Moreover, it says it now serves over 20,000 postal codes across the country, with more than 75% of its customers coming from tier-2 cities and beyond.

However, educating customers about alternatives to their prescribed medicines — and convincing them to switch from branded drugs to generics — remains a challenge.

“Because you get anchored to your prescribed brand’s price, and when you suddenly see a lower price, you want to know why it is low,” Nayyar told TechCrunch.

Increasing discounts while competitors cut back

While today’s e-pharmacies chase speed over savings, the sector’s early playbook was different. Online pharmacies in India used to offer discounts of up to 25% to attract customers. However, Nayyar said this dropped to 20% and then 15% — the new average — as most burned cash to acquire new customers and pivoted to faster delivery as their main differentiator.

Meanwhile, Truemeds has gone in the opposite direction, increasing its average discounts from 29% to 32% in the last 12 months. For an average user who switches brands on the platform, savings reach 47% on their medicine, says the company.

This comes from Truemeds’ deep procurement relationships with pharma companies, where the startup uses its technology to give manufacturers better demand visibility, helping them plan production more efficiently for upcoming quarters, he said.

The startup also relies on its own logistics in some of the major cities it operates in and uses low-cost logistics partners for the rest.

“We believe that our four-hour delivery model is more than sufficient from a chronic patient’s perspective,” said Nayyar. “You’re able to do more planned purchases that way, but we want to do it in the most efficient manner, and pass more and more discounts to the end user rather than [focus on] the fastest delivery for that matter.”

Next up: AI-powered customization and doorstep diagnostics

As Truemeds needs to convince customers to choose generics over branded medicines, it goes through deeper consultations with them. It already conducts 10-12 million consultations per year. The startup has developed an algorithm over the years that looks at various parameters to precisely suggest alternatives to the branded drugs a customer demands. It considers nuances such as whether the medicine is sugar-coated if it is for a young patient, where it is manufactured, and whether the plant is GMP-certified, among others. The startup also has a chatbot to address some user queries quickly.

Much more is on the roadmap. The company plans to develop an AI-based system that customizes conversations based on customers’ behavior and previous interactions with generic alternatives. It’s also opening a Bengaluru office while dedicating at least 20% of its capital to engineering and product development.

Beyond medicines, Truemeds is plotting to enter diagnostics through partnerships with national pathology labs, planning to pilot lab testing services in some tier-2 cities in the next three to four months.

“The primary mission remains the same, which is making healthcare affordable for the end user,” the co-founder said. “It started with medicines. Now that the model is getting established, we are going to keep scaling that. Simultaneously, we also want to see if we can do something similar on the diagnostics front, where we can be the lowest cost provider of at least the most common tests.”

The startup also plans to increase its fulfillment center count by 300% — from 19 currently — over the next 12 months, aiming to deepen its presence in existing markets.

Before this round, Truemeds raised $50 million and still has 30–35% of that capital in the bank, Nayyar said.

The startup has a workforce of 2,800 people, with 250 based in its Mumbai office.