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Published on: July 26, 2021, 1:23 p.m.
Sastasundar’s healthy approach
  • Mittal: creating digital healthcare ecosystem, Photo: Sajal Bose

By Sajal Bose. Executive Editor, Business India

India’s rapid adaptation to e-commerce through the increasing use of smartphones is transforming the online pharmacy space too. The Covid lockdown in the country has witnessed a surge in e-pharmacy orders, as it is not only convenient but also safer. The segment is gaining momentum with huge projected opportunities. And, large corporates too are entering the segment, the business of which is pegged at $350 million and expected to grow by $3 billion in the next four to five years.

Eastern India’s largest e-pharmacy, the Kolkata-based Sastasundar, has quietly consolidated its position pan India. After establishing itself in Kolkata and Noida, it set up its third area logistic centre (ALC) in Bhiwandi, Maharashtra in December 2020, to expand its network in the western part of the country, through a chain of retailers called Healthbuddy. Today, the company has over 450 Healthbuddy centres (franchises) across India, having doubled the tally from 205 during the last three years.

Its network covers eight states, with West Bengal having the largest number of units (290). The rest are spread over NCR, UP, Bihar, Odisha, Jharkhand, Maharashtra, Assam and Uttarakhand, serving over 2.5 million households. The company is also exploring avenues in the entire north-eastern region. The states, where its network has not been built yet, are being served through couriers. 

India has a large population. While the country is one of the largest manufacturers of branded medicine, 65 per cent of the population of the country do not have access to basic healthcare and are deprived of essential medicines. Also, 30 per cent of children in India suffer from malnutrition. Unqualified doctors prescribe a large quantum of medicines. And, fake products are widely distributed across the nation, covering all economic and regional segments. 

While everybody sees these issues as problems, it was only serial entrepreneur BL Mittal, who looked at it as an opportunity. With his sharp business acumen, he realised that organised and accredited supply systems were not present in many suburban and rural areas. Distribution is also not integrated with information, knowledge, counselling and connected resources.

He decided to move into the space and founded in 2013, in tandem with his long-time associate Ravi Kant Sharma. “Our motto was to provide low-cost, genuine and high-quality healthcare products and services through a digital healthcare platform,” recalls Mittal. “This would change the game of the segment.”

 Reason for success

A chartered accountant by profession, Mittal is today the chairman of the company. He always had an entrepreneurial zeal in him. To begin his journey as an entrepreneur, he quit a well-paying job at Birla Corporation and co-founded Microsec Financial Services in 2000. He sold Microsec to the Mumbai-based Narnalia group in 2016, but not before starting Sastasundar a wholly-owned subsidiary of the Sastasundar Venture, a listed company, in 2013. Both Mittal and Sharma’s estimation of the growth of digital healthcare proved right, as e-pharmacy in the country has seen tremendous growth since then.

The duo nurtured the business innovatively and became one of the top four players in the segment, rubbing shoulders with PharmEasy, 1mg and Netmade. “The company has achieved revenues of Rs540 crore, at a CAGR of about 36 per cent during the last three years,” says Sharma, co-founder & CEO, Sastasundar. “The reason for our success has been that we offer products from prescribed medicine to wellness products and have created a last mile network,” he adds. As much as 32 per cent of the company’s revenue comes from the semi-urban and rural markets. 

  • Sharma: Genu Path Lab; advanced diagnostic centre at an affordable cost

The company also decided to offer pathological services in 2019, by setting up a diagnostic centre called Genu Path Lab – an advanced lab for performing esoteric and complex tests and prompt reporting of the results of general tests. Today, it also offers health packages. Situated at Rajarhat, Kolkata, the lab follows stringent process control to ensure accurate test results.

“The lab dedicates itself to providing high-quality diagnostic services at an affordable cost,” Sharma claims. “It also has 20 collection centres across the state. The quality-focussed approach led Genu Path to get accreditation from NABL within a short period of commencing operation.” 

The company also plans to open 20-satellite labs at the district levels in Bengal – with the first one coming up at Balurghat. Sastasundar plans to replicate the Genu Path Lab experiment in other states too. However, “It is important to focus on one region first and create a reputation before venturing into other areas,” Mittal points out.

Sastasundar’s digital healthcare platform manages an efficient pharmacy and wellness product supply chain, employing 1,500 people. It also connects doctors, diagnostic services, healthcare clinics and health information services. The company’s digital network is built on online and offline models through Healthbuddy, a chain of retailers. The company has three verticals – pharmacy, diagnostics and wellness. 

The name Sastasundar comes from an Indian expression, which denotes the consumers’ aspiration for high quality at low cost. It is the market leader in the east, which constitutes 80 per cent of its sales. The company competes well with other major e-pharmacies in the country.

The Healthbuddy Centre provides access to pharmacists, who want personal attention and counselling. In addition, it processes all orders and delivers the items at the doorstep of customers. The company’s own wellness product portfolio and health information services are available across the nation. There is one Healthbuddy centre within reach every three km.

The innovative model of the Healthbuddy system strengthens the company’s relationship with the customers, does the last mile logistic, substantially reduces operational cost and gives some competitive advantage to healthcare retailing. People without smartphones can also walk into a Healthbuddy centre for placing an order. This helps the company reach the masses easily. An average size of a Healthbuddy outlet is 120 sq ft and the capital cost of each is Rs3 lakh. The retail store is not required to keep inventories. 

Digital innovations

True & Care, a Healthbuddy store at Sonarpur in the suburbs of Kolkata, has been associated with Sastasundar for the last six years. “Sastasundar is a popular name within the segment operating efficiently in West Bengal,” says Biswajit Ghosh, who owns the store and caters to clients within an 8-10 km area. “No-one can match its level of transparency and services. My income has increased significantly over other chemist stores in the locality, because of my association with it.” 

The company has continuously worked on its digital innovations, to create a better experience for customers. The recorder reminder tools; smart search, with ordering facility; personalised customer interface; information about medication, their effects and side effects, as also alternate medicines; content focus on health – all these are some of the unique interactive features it offers. Sastasundar app has been mentioned by the government of India as one of India’s best AatmaNirvar apps. It has close to 3.5 million registered users.

  • None

Sastasundar maintains a central system of medicine procurement at a bulk rate from manufacturers and distributors, following a quality check. When a customer places an order, it automatically goes to the local Healthbuddy, closest to the customer. In turn, Healthbuddy sends it to the company’s elevation centre or warehouse. All the medicines or wellness products are packed according to the order and shipped from the warehouse to the Healthbuddy, which in turn delivers them to the customers. 

The company follows a cost-effective model that allows supplying genuine medicines at a maximum discount, and passes on the savings to the customer. It also provides customised report of alternative brands of medicines that are available at comparable low cost. Thus, customers can consult their doctors and get them substituted as per professional advice.

“Our company maintains an average inventory of four weeks. At present, it manages an average of 23,000-plus orders a day. About 90 per cent of them are repeat orders from existing, loyal customers,” says Mittal. Its user-friendly mobile app and website provide a smooth interface to order and reorder with a click that ensures free home delivery. 

“Sastasundar, a lean cost operator, is growing its presence in the mature markets,” clarifies Sagar Shroff, account manager, Orient Capital. “It is the market leader in West Bengal and its scale of operation and the cutting-edge technology it has adopted help to determine its success in the segment. Sastasundar has demonstrated its ability to move in that direction.”

The company had invested Rs35 crore in 2013 to set up a state-of-the-art temperature-controlled computerised inventory management warehouse and a manufacturing facility for its own wellness products at Baruipur, on the outskirts of Kolkata. Sastasundar bought this large piece of land through auction from the West Bengal Industrial Development Corp (WBIDC), which had closed down the unit of the government-owned ailing Krishna Glass, which stopped production in 1991.

Lockdown due to the Covid pandemic created an opportunity for the segment, by increasing the demand for virus-related medicines and vitamin supplements by about three times. However, there were challenges too like the movement of delivery workforce, closure of inter-state borders and shortages of fleet, clarifies Ramesh Kumar Sharma, whole-time director, Sastasundar. “Sometimes, we had to pay double for logistics. But, despite all difficulties, our teams were able to serve the community effectively.”

Sastasundar has developed its own bouquet of brands. They include: 

• Chefon, a made-to-order, fresh gourmet service, particularly health supplement cookies, chocolates, brownies, snacks, etc.

• DNAVita, a customised health drink, made of natural ingredients, for nurturing fitness, bone health and brain nutrition and is produced in proportion to age, height and weight. 

• YANA Diet, online diet clinic, which works on holistic diet plans to lose weight and reduce medicine intake (it also offers personalised diet consultation, etc.)

Immunity products

Sastasundar’s exclusive products cater to healthy and lifestyle needs. It has introduced a new range of pro-immunity products under the name, Herbs & Spices. Sastasundar Happy Box is a unique gifting solution – a ‘happy box’ for all occasions. It is thoughtfully designed and contains gourmet products and health foods. 

Sastasundar also offers third-party FMCG products for its customers. The platform offers over 500 healthcare and FMCG products, besides medicines. “The single window solution has helped us to increase our customer base,” Mittal explains. “We do things that are right for business, with a long-term view in mind.”

  • Temperature controlled computerised inventory management warehouse

As part of an expansion programme, in 2017, Sastasundar went in for a capital and business alliance with Rohto Pharmaceutical of Japan – a global leader selling and marketing its products in over 120 countries – which has invested Rs32.4 crore in the company. Similarly, in 2019, Mitsubishi Corporation invested Rs100 crore in Sastasundar to scale up its business operations. Both Rohto and Mitsubishi together now hold 28 per cent of the equity in the company. 

Sastasundar is looking for further funding. “Size matters in this segment,” observes Mittal. “So, we are constantly entering into new markets. We are planning to raise funds either through our existing investors or new PE firms.” It is reported the company is aiming to raise $100 million in multiple tranches in the next two years. 

“Sastasundar is a fast-growing company with a unique model. Healthbuddy is a good platform through which to become aspiring local entrepreneur,” says Santanu Chattapadhya, a former senior executive with 1mg. 

The online pharmacy segment presents a huge growth opportunity and is immune to economic slowdown. In the last two years, large conglomerates like Reliance, Tata and Amazon have entered the e-pharmacy space. It has also witnessed mergers. E-pharmacy companies offer huge discounts to woo customers; so, they are burning cash, with none of them making a profit. Experts in the industry say that players with deep supply chains and extensive market reach are likely to benefit from the scale. “It is important for Sastasundar to bring in prominent investors, so as to grow,” feels Chattapadhya. 

“E-pharmacy in India has a certain committed capital cost,” Sharma adds. “It needs volume to absorb cost. Our management efficiency reduces our losses significantly when compared to our peers. In the coming years, we expect to accelerate our revenues and earnings substantially.” 

Sastasundar reported revenues of Rs540 crore in 2020-21, as against Rs384 crore in 2019-20. Of this, revenues from the pharmacy constitute 89 per cent, while the rest has come from wellness and diagnostic centres, which are likely to grow further in the next financial year.

Going forward, the competition is likely to be intense, with large corporates coming in. But, “The e-pharmacy industry is huge and can easily accommodate many players,” argues Mittal. It will be interesting to see whether Sastasundar is able to grow in a sustainable manner and fend off the approaches of the biggies, who seek to enter every new field.

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