It’s not often that a startup has the government to thank for its fundraising. There’s no other way to explain marquee investors cutting an $85 million cheque for a company in a sector that has been unkind to entrepreneurs and venture capitalists alike.

Peak XV Partners, Accel, and others’ bet on Truemeds is not about selling drugs online but about selling alternatives to branded medicines at bargain-basement prices.

Building a retail or e-commerce business almost entirely around generics is only possible because the government’s Jan Aushadhi pharmacies convinced millions that it was just fine, maybe even prudent, to buy cheap, unbranded drugs.

Just like the government buys generics from existing manufacturers in the business—the likes of Rivpra Formulation, Unicure India, and Theon Pharmaceuticals—Truemeds, Zeelab Pharmacy, Zeno Health, Davaindia, and several others, too, are building their businesses online and offline with the same USP: shave off your medicine bill by 50–90%.

Generics (also known as “trade” or “unbranded” medicines) are usually cheaper than branded medicines with the same active ingredient. That’s because their makers—pharma companies, independent manufacturers, and e-pharmacy players—don’t incur additional costs for marketing and wooing doctors, like in the case of branded medicines.

That way, even after accounting for heavy discounts, companies selling generics make good margins. “With top pharma companies, you have a play of up to 60%. So, you can give a 40% discount and keep 20% in margins. You can give 30% discounts and have 30% in margins,” said Akshat Nayyar, chief executive and co-founder of Truemeds.

The six-year-old startup, reportedlyThe Economic TimesTruemeds closes $85 million funding led by Accel and Peak XV Partners valued at over $400 million, generated Rs 325 crore in revenue in the 2024 financial year—almost doubling from the previous year, according to market-data provider Tracxn. The company declined to share what percentage of its top line comes from selling generics.

But selling cheaper alternatives can only get you so far in the business. By value, generics in India is a Rs 24,000 crore segment while branded drugs are valued at over Rs 2 lakh crore. And more than eight out of every 10 drugs sold in the market currently are branded.