Healthcare major Apollo Hospitals Enterprises Ltd (AHEL) is expected to see its e-pharmacy business to gain around 14 per cent market share over the next five years, driven by the omni-channel model it is currently working on, according to a latest report from Motilal Oswal Financial Services Ltd (MOFSL).

AHEL’s digital health platform’s flagship offering, its e-pharmacy, has deep roots due to a 4,300 strong physical store presence, driving not just a wider reach for the company than pure online pharmacies, but also enabling an industry-leading delivery time of two hours. It already has an efficient distribution business in place that supplies exclusively to all its pharmacies, said MOSL, which is initiating coverage on the company.

The advantage is that these stores will help the company to achieve short delivery times through the omani-channel model, serving a substantial population requiring acute treatment medications - something that pure online pharmacies have failed to achieve - apart from addressing the chronic drug needs of the patients, it said.

“We believe that AHEL’s current omni-channel model makes the company well-placed to grow its online pharmacy revenues, on the back of an exponential growth of 15x in orders per day and revenue per order CAGR of 11 per cent over the next five years,” said the report.

The brokerage firm also believes that AHEL's 24/7 online pharmacy revenues can grow to $400 million by FY 25 from a $40-50 million annualised run-rate currently.

It is also expecting the pharmacy distribution business to record a CAGR of 17% over FY21-24, on the back of same-store sales growth, higher private label penetration and new store additions, with benefits from a ramp-up in 24/7 deliveries.

AHEL is one of the largest hospital chains in the country with 71 owned and operated hospitals, with over 10,000 beds capacity and more than 7,800 operating beds. One of the key risks in achieving the pharmacy growth would be the lower-than-expected share of private labels in the pharmacy business and lower-than-expected ramp-up in daily online orders, it added.

The company has earlier reorganised its business, moving the front end of the pharmacy retail business to Apollo Medicals Pvt Ltd to attract investment and faster growth.