Why Investors Are Betting $85 Million on This Indian Firm’s Generic Drug Strategy

With over 400 million individuals managing chronic conditions, India stands as one of the largest pharmaceutical markets globally. While numerous e-pharmacies emphasize swift service, the real hurdle is affordability. Truemeds has opted for a different approach: helping patients shift to lower-cost alternatives, a decision that has recently attracted significant new investment, elevating the company’s valuation to nearly four times its prior worth.

The six-year-old startup has successfully raised $85 million in a new funding round, composed of $65 million in primary funding and $20 million in secondary funding, led by Accel, with contributions from Peak XV Partners. Reports from TechCrunch indicated that Accel was in talks to back Truemeds since last year. Existing investors, including WestBridge Capital and InfoEdge Ventures, also participated in this round.

This funding injection has increased Truemeds’ valuation to over $400 million, a substantial rise from $110 million two years ago during its previous funding round.

Founded in 2019, Truemeds entered a crowded Indian online pharmacy market dominated by major players offering significant discounts on branded generics. Many of these firms faced challenges maintaining early momentum — for instance, PharmEasy, supported by Prosus Ventures, experienced a valuation drop from a high of $5.6 billion to under $600 million, while 1mg was acquired by Tata Digital, which is part of the Tata Group. Rather than competing head-on, Truemeds’ founders decided to focus on a specific niche: generic medications.

“If users can’t afford their medications, they won’t be able to learn about more affordable options,” said Truemeds co-founder Akshat Nayyar in an interview. “We discovered that no one in the value chain was addressing this issue, and we could fill that gap.”

Based in Mumbai, Truemeds offers recommendations for generic alternatives to the branded medications that consumers need. This allows customers to save money since generic drugs generally cost less than their branded versions due to more efficient development processes.

Truemeds claims that its distinctive strategy is working, as revenue has surged over 66% year-on-year, totaling ₹5 billion ($57 million) in the last fiscal year. The startup retains over 15% of its revenue after one year and now serves an average of 500,000 customers monthly, with a cumulative total of 3 million customers so far. Additionally, it operates across more than 20,000 postal codes in India, with over 75% of its clientele coming from tier-2 cities and beyond.

However, educating consumers about alternatives to prescribed medications — and encouraging them to switch from branded to generic options — remains a challenge.

“Since you often anchor to the price of your prescribed brand, a lower price raises questions about why it is so much cheaper,” Nayyar explained to TechCrunch.

Increasing discounts while competitors cut back

Though many e-pharmacies now emphasize fast service over savings, the original strategy for online pharmacies in India focused on providing discounts of up to 25% to attract customers. Nayyar observed that this average has dipped to 20% and further to 15% as many have spent heavily on customer acquisition, changing their focus to speedier delivery as their primary selling point.

In contrast, Truemeds has boosted its average discounts from 29% to 32% over the past year. For users who switch brands on the platform, potential savings can reach as high as 47% on their medications, according to the company.

This advantage stems from Truemeds’ robust procurement relationships with pharmaceutical companies, utilizing technology to give manufacturers better visibility into demand, thereby aiding more efficient production planning for the upcoming quarters.

The startup also employs its own logistics in major cities while partnering with cost-effective logistics providers in other regions.

“We believe our four-hour delivery model adequately meets the needs of chronic patients,” Nayyar stated. “This enables more planned purchases, allowing us to optimize efficiency while providing greater discounts to consumers, rather than emphasizing speed of delivery.”

Next up: AI-powered customization and doorstep diagnostics

As Truemeds strives to persuade customers to choose generics over branded medications, the company conducts extensive consultations with its clients, performing around 10-12 million consultations annually. Over the years, it has developed an algorithm that assesses multiple factors to accurately recommend alternatives to the branded medications requested by customers. This algorithm considers specifics such as whether a medicine is sugar-coated, its suitability for young patients, its manufacturing origin, and whether the production facility is GMP-certified. Furthermore, the startup employs a chatbot to quickly answer certain user inquiries.

Looking ahead, the company is developing an AI-driven system designed to customize interactions based on user behavior and past engagements with generic alternatives. Additionally, it is opening a new office in Bengaluru and pledging at least 20% of its capital toward engineering and product development.

Beyond medications, Truemeds intends to enter the diagnostics field through collaborations with national pathology labs, with pilot lab testing services expected to launch in several tier-2 cities in the next three to four months.

“Our core mission remains the same: making healthcare affordable for the end user,” the co-founder asserted. “It started with medications, and now that the model is gaining traction, we intend to continue scaling this. Simultaneously, we wish to pursue similar initiatives in diagnostics to position ourselves as the lowest-cost provider for common tests.”

The startup plans to enhance its number of fulfillment centers by 300% — from the current 19 — over the next year, solidifying its presence in existing markets.

Before this funding round, Truemeds secured $50 million and still has 30–35% of that capital in reserve, Nayyar mentioned.

The startup employs 2,800 individuals, with 250 stationed at its Mumbai office.