His uncle was suffering from pneumonia and it was getting worse since he wasn’t able to source the medicine. He checked all the pharmacies around, but none had stock of that particular medicine. Two days later, he did hear back from one pharmacist about fresh stock reaching the store, but then he had lost his uncle.
This was somewhere between 2012-13, in the heart of capital city, and not the distant remote one, but this incident left Navneet shattered and made him reflect, how unavailability of medicine right at time of need can cost a life. Navneet Jain, now founder and CEO of Medfinder, an mobile app selling medicines is now on a mission to save lives and helping every patient get his dose.
Started in October 2014, Medfinder is a health assistant founded by Navneet Jain, Puneet Jain and Rajesh Sharma. The app helps users search and order medicines, get it home-delivered, set medication reminders, get automatic refill reminders and also manage prescriptions & reports.
Once the order is placed on the mobile app, it raises an alert to the systems. After which their in-house pharmacist calls the customer for a quality check. This involves checking for the details of prescription, nature of illness, number medicines and the number of days it is required for. After the quality check, an order is placed and collected from the distributor by the Medfinder team. Finally, it is then packed and delivered to the customer, within 24 hours of request being placed.
With the presence of number of regulations, operating healthcare and pharmacy becomes difficult. Since, Medfinder deals directly with the end customers, it is considered a retailer by definition and a retailer is not allowed to accept online payment for medicines. Hence, the team has to follow the cash on delivery payment mode. Furthermore, every medicine purchased needs doctor’s prescription. So the app lets customers upload the picture of the prescription document which makes it easier for customers to place order.
Medfinder is currently operational in Mumbai, but with leveraging on its location, it plans to enter the neighborhood cities like Pune, Nagpur and Nasik, followed by its expansion in the capital city.
Currently, it has over 70,000 types of medicines, from 100 pharma companies available on its platform.
Medfinder has voluntarily chosen to be away from the marketplace and aggregator model. To have better control on their turnaround, delivery, stock and finances, the startup took the processes in-house. “ We could have been the asset-light aggregator that works with big pharmacy retail chains for order placement and delivery, but we chose not to be the one. Instead, we built our hybrid model, where we do not hold inventory to stock and sell, so our investments go in building supply chain. We have built a valuable relationship with the distributor for on-demand order placement and purchase. However, once we touch scale, we might involve third party logistic firms for express delivery, “ shared Navneet Jain.
Medfinder is currently working with 15 distributors. Its in-house team includes 5 delivery boys that cover entire Mumbai city and internal logistics team for packaging and returns.
Though the startup has started with medicine delivery for now, but it plans to play a larger role in the healthcare segment, diversifying beyond the pharmacy segment. Going further, it also plans to introduce healthcare products and services, enabling medication management including prescriptions & reports.
Patients would also be able to reach out counsellors and consultants, on demand. “Once we entere customer house, we would like to become their lifestyle partner through regular engagement. Our customers can book diagnostic tests on mobile app, get it done at home according to their convenience.” While the conversations with pathology labs are continuing, it is also exploring alliance with medical devices to monitor diabetic, blood pressure etc.
Interestingly, Medfinder users are not only old and senior group with chronic diseases, but around 60% of its registered users are fall in 25 -35 age group, seeking medicines for issues related to skin, hair, hypertension, cholesterol, liver and obesity. It is also seeing a lot of pregnant women registering for personal and baby needs.
At present, Medfinder receives 500 orders in a month with a gross merchandize value (GMV) of roughly $10,000, about 70% of which is a repeat business, as claimed by the company. Looking at this growth, in next 8-9 months, it expects to touch 5000 orders per month in orders and roughly $11,000 in annual sales.
Competitive landscape and other challenges ahead
In volume sales, Pharma sector is considered to be the third largest sector in the country, and thirteen largest in terms of value. According to IBEF report, till 2020 spending in healthcare space is expected to touch $280 Bn from $ 65 Bn in 2012, growing at a CAGR of 20%. And in one year, the share of pharmaceutical sales, as a percentage of total healthcare spending, is expected to increase to 27 % from 18.9 % in 2008.
At present, there are many players in pharma segment like Guardian Lifecare, Fortis, Apollo Pharmacy, MedPlus and then a network of unorganized retail pharmacy stores. However, its main competition comes from online players like 1MG and HealthKart.com. And following its growth strategy, once it diversifies into healthcare and diagnosis, it will face new set of players like Practo.
Healthcare is attracting a lot of investment. Doctor finding app, Practo is said to be valued at $150 Mn given the funding it raised from Tencent, Matrix Partner, Sequoia Sofina, Google Capital, Altimeter Capital and Global Equities. Other fairly newer entrants like Zoctr, Lybrate, Ziffi, Quikwell and more that have recently raised funding. Zoctr recently raised around $1 Mn from Sandeep Parwal, Krishan Gupta and others, while Lybrate raised around $150,000 from Tiger Global Management, Ratan Tata and Nexus Venture Partners.
However, as mentioned above, healthcare and pharma is a tough and highly regulated business. Since government determines prices of products, the margins are very low for majority of the medicines. Even in order to acquire a license for selling medicines, retailer needs to own a physical space to procure, stock and dispense products. And considering it viable for small retailers, there is no consideration of online retailers.
The startup also faces tough competition and hostility from the concerned associations. The startup is running on a bootstrap mode and is yet to raise any external fund.
Medfinder has entered a well-networked market segment with great vision in mind. Given the nature of the business, with a lot of government intervention Medfinder does not have much scope of innovation around its offering and business model. And this has been inhibiting as a lot of other players from entering into this segment. This implies for those players as well that enter run on the periphery with consultation, communication and aggregation. While on one hand, it reduces the competition, attractiveness quotient for investor and market overall.