How start-ups are shaking up offline pharma business

Bulk of the medicine sales in the $22-24 billion domestic pharma market happens through offline retail chemists.

With the entry of online pharmacies, this space has started to witness a shake-up.

Sample this: Dawaa Dost, a Rajasthan based digital health start-up, generates medicine orders from ‘kirana’ stores and women self-help groups (SHGs) that operate in villages, and then service these orders through its affiliated network of pharmacies.

Biddano, another health-tech start-up, has a platform that acts as an aggregator for neighbourhood chemist shops.

Biddano also manages the supply-chain backend for retail pharmacies, right from the stockist direct to the chemist.

Hyderabad-based start-up MedleyMed has started to offer telemedicine kiosks at chemist outlets, apart from digitising the pharmacies.

“The dynamics are fast changing in this space as offline players gear up to ‘modernise’ themselves and equip for value-added services, better turnaround times etc,” says Amit Choudhury, CEO of Dawaa Dost, an omni-channel pharmacy platform.

Backed by Singapore Angel Network, Dawaa Dost has been expanding its ‘kirana’ network.

From 500 stores last year, it now has a network of 2,500 kirana stores in Rajasthan, that generate orders.

“We originate orders from the kirana stores using our tech platform and then these orders are fulfilled by our stores,” Choudhury says, who feels that the idea was to be in the ‘micro-vicinity’ of his customer.

Choudhury has now started mobilising SHGs in Rajasthan and is talking to the state government on this.

SHGs have a wide reach in the hinterland, and these under-serviced areas could be serviced by a network of pharmacies once these orders are aggregated.

From 30 million people it reaches out to every month, Dawaa Dost wants to scale up to 100 million by 2022-end.

Pune-based Biddano, which has raised $5 million so far from micro VC funds like First Cheque, Windrose Capital etc, and from angel investors from Silicon Valley (Gokul Rajaram), started off in November 2016 as a business to consumer (B2C) pharmacy aggregator platform for local pharmacies.

Soon it realised that to meet the promise of a quick same-day delivery, it needed to work on the back-end supply chain.

Biddano co-founder and CEO Talha Shaikh says the firm put the B2C venture on hold in 2018 and began plugging the gaps in the pharma supply chain.

“Typically, it takes a stockist 24 hours to deliver medicines to a wholesaler or distributor, and it takes another 6-12 hours before the distributor sends the medicine to the retailer.

"In smaller cities it takes 2-3 days at times before the medicine a retailer orders reaches him,” Shaikh explains.

Biddano started working with stockists and/or distributors directly and provided this last mile direct connectivity to the retailer who often does not carry much inventory.

This ensured that if the chemist placed an order through Biddano’s platform, he got a delivery within three hours.

The start-up has already on-boarded 200,000 chemists on its platform who order through them.

India has around 800,000 to 1 mn chemists.

After streamlining the supply chain Biddano has now recently launched its brand B-Pharmacy that would digitize the neighbourhood pharmacy – orders can be generated online through prescriptions and serviced by the neighbourhood chemist.

“Within the next 24-months we expect around 200,000 pharmacies to be a part of this B-Pharmacy network.

"We would also scale up our presence from the current 23 cities to 53 cities,” Shaikh says.

Biddano is also tapping into the FMCG and OTC supply chain.

About 30 percent of all product sales at a chemist shop are FMCG goods or OTC products like a headache balm.

“FMCG companies have started approaching us to be their exclusive supply partner for the chemist channel as we already have 200,000 chemists on our platform,” Shaikh says, who adds that even tele-medicine companies can use their platform to service the prescriptions generated on the telemedicine platform.

Hyderabad-based MedleyMed too is working with offline chemists and digitizing their offerings.

"We are helping retail pharmacies to source medicines at reasonable prices, and also offering an e-pharmacy option to the standalone retailer through our platform,” M Satish, managing director, Athena Global Technologies and MedleyMed says.

Standalone retail pharmacies can also opt to go for MedleyMed branding and thus MedleyMed aims to create a network of such franchise stores.

MedleyMed has started offering telemedicine kiosks at chemist shops as a value added service.

It has piloted in Hyderabad with 40 stores that have ‘Ananda e-clinic’.

The plan is to have 100 stores under Beta test pilot.

“We have on-boarded 4,000 pharmacies in our platform in Hyderabad, out of which 2,000 stores have been added recently.

"We will have transactions from these stores in the coming days. We are now expanding in Tier 2 cities of Telangana,” Satish says, adding the firm is yet to raise external funding from PEs and VCs.

An industry insider said that with the entry of big players like Reliance, the Tatas, and Flipkart into this space, the dynamics of delivering medicines to Indians would change further.

“Consolidation is a buzz-word. Start-ups like Sastasundar Marketplace were acquired by giants like Flipkart.

"In parts of Uttar Pradesh biggies are now buying out large distributors and stockists, and thereby consolidating their hold on the supply-chain,” the person who did not wish to be named said.

Offline players would need to innovate and value-add to remain relevant to the Indian consumer.