India, a nation with over 400 million chronic patients, presents one of the world’s largest markets for medicines. While many e-pharmacies have prioritized rapid delivery, the persistent challenge of affordability remains a critical hurdle for millions. Stepping into this complex landscape, Indian startup Truemeds has carved a unique niche by guiding patients towards lower-cost generic drug substitutes, a strategy that has now paid off significantly with substantial new funding.

Truemeds has successfully raised $85 million in its latest funding round, comprising $65 million in primary funding and $20 million in secondary funding. The round was led by Accel, with participation from Peak XV Partners, WestBridge Capital, and InfoEdge Ventures. This significant investment has propelled Truemeds’ valuation to over $400 million, a substantial leap from its previous valuation of $110 million just two years ago. TechCrunch had previously reported on Accel’s talks to invest in Truemeds at a $330 million valuation last year.

Founded in 2019, Truemeds entered an e-pharmacy market already populated by major players offering discounts on branded generics. However, the sustainability of such models proved challenging for many; for instance, Prosus Ventures-backed PharmEasy saw its valuation plummet from a peak of $5.6 billion to under $600 million, while 1mg was acquired by Tata Digital. Truemeds’ founders chose a different path, focusing on the relatively untapped segment of generic medicines.

“There is no way to educate the user that you can have more affordable options if you can’t afford these drugs,” explained Truemeds co-founder Akshat Nayyar. “That is where we felt that nobody in the value chain was working towards that, and we can bridge that gap.” The Mumbai-based company assists consumers by recommending generic alternatives to their prescribed branded medicines, making healthcare more accessible by leveraging the cost efficiencies inherent in generic drug development.

This differentiated approach has translated into impressive growth for Truemeds. The company reported a year-over-year revenue increase of over 66%, reaching ₹5 billion (approximately $57 million) in the last financial year. Truemeds states it retains over 50% of its revenue after 12 months and currently serves an average of 500,000 customers monthly, with a cumulative total of 3 million customers to date. Its reach extends across more than 20,000 postal codes nationwide, with over 75% of its customer base originating from tier-2 cities and beyond.

While competitors initially offered discounts but later scaled them back, Truemeds has moved in the opposite direction. It increased its average discounts from 29% to 32% over the past year. For customers who switch to generic alternatives through its platform, the savings on their medicine can reach an average of 47%. This cost advantage is bolstered by Truemeds’ strong procurement relationships with pharmaceutical manufacturers, providing them with better demand visibility through its technology, which in turn aids efficient production planning. The startup also utilizes a mix of its own logistics in major cities and low-cost partners elsewhere.

“We believe that our four-hour delivery model is more than sufficient from a chronic patient’s perspective,” Nayyar commented. “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.”

Looking ahead, Truemeds is set to expand its services by integrating AI and venturing into diagnostics. The company plans to develop an AI-based system to customize patient interactions based on their behavior and past experiences with generic alternatives, building on its current practice of conducting 10-12 million consultations annually. An algorithm already helps suggest precise generic alternatives by considering factors like formulation, patient age, manufacturing location, and GMP certification. Plans are also in motion to pilot lab testing services in tier-2 cities within the next three to four months through partnerships with national pathology labs, aiming to become a low-cost provider for common diagnostic tests.

Further growth includes a significant expansion of its logistics network, with a goal to increase its fulfillment center count by 300% from the current 19 within the next 12 months. Truemeds currently employs a workforce of 2,800 people, with 250 based at its Mumbai headquarters. Prior to this latest funding, the company had raised $50 million and reported having 30-35% of that capital remaining.

The company’s strategic focus on affordability, enhanced by technological solutions and a commitment to customer education, positions Truemeds as a significant player in India’s evolving healthcare landscape, attracting substantial investor confidence.