Like many startups GGV speaks to, Pharmeasy began with a mission to solve a very real problem. “I thought that the entire outpatient ecosystem in India is very, very broken,” said Siddharth Shah, co-founder and CEO of India’s largest digital health system. Today, Pharmeasy works to make healthcare accessible and affordable, and supplies medicines to more than 1,000 cities and towns in India. The company also completed a merger deal with its rival MedLife in August 2020, creating India’s 22nd unicorn (at time of publication).
To add to the challenges consumers face with a fragmented supply chain and the inconvenience of purchasing medication from multiple retailers, India is also one of the few countries with a medical culture of selling more expensive branded generics. And these branded generics may not be authentic. “Given that anybody can register their own brand of generics and get them contract manufactured, the possibility of pilferage and infiltration of substandard products in the supply chain is pretty high,” Siddharth noted.
India only spends 1.6% of its GDP on public healthcare, far below many other countries. This means their public healthcare sector is vastly underfunded, and consumers have to bear the brunt of costs. “We do not have any outpatient insurance cover,” Siddharth explained. “In simple terms, it means that if you go and visit a doctor, if you buy your medicine, or you get your test done, there is no coverage by any kind of insurance…all of this payment is 100% out-of-pocket.”
Rights group Oxfam estimates about 63 million Indians are pushed into poverty every year due to healthcare costs.
Crafting an ecosystem
In the face of these massive systemic inefficiencies, a shop, or even a chain of shops was not going to make enough of an impact. Siddharth learnt this the hard way when he first created Dialhealth fresh out of business school, and realised providing access to information was not enough. “There really is a massive vacuum in providing these authentic medicines at affordable rates to patients,” he said. “I realised that just getting demand does not work. And you need to focus on the supply. So, I pivoted from being a platform that connects the patients to actually becoming a chain of retail stores.”
He was in for another lesson. “Once I ran these retail stores, I realised that retail is extremely fragmented and unless you control the supply chain, you can’t deliver a superior consumer experience.”
At this point, it was clear to Siddharth that he had to go big with a comprehensive solution which covered supply, authenticating medication and sourcing them at prices the average Indian could afford. Pharmeasy was his graduation project from the school of hard knocks.
He and his team haven’t looked back since. “A lot of people have actually written us off,” he recalled. “But the fact that we’ve been able to come this far is not just because we are great at getting demand…we are great in the supplies and I think that’s where we’ve been able to make a significant difference to the consumer’s life.”
With Pharmeasy, Siddharth and his team have built an end-to-end healthcare access experience, where consumers purchase medications and diagnostic tests with a prescription online, and have the genuine drugs they need delivered to their doorstep. This included a back-end, Retailio, which they built from scratch and opened up as a service offering to B2B partners like retailers. “It was actually a gut call,” Siddharth recalled. “Should we open…our technology and let others also ride the wave with us…are we giving away our IP to a ton of people?” The move worked out – Retailio was the key draw which brought Pharmeasy the partners who power its vision of authentic, affordable medications.
“A lot of other people are competitors who have a lot more consumers at the front end,” Siddharth mused. “But they’re not able to convert the consumers into a transaction. And they’re not able to get the consumer experience that you’d want to scale these up. But I think our success lies in the fact that we’ve used this network [Retailio].”
Pharmeasy was not the first of its kind, and certainly not the last. The healthcare industry in India is expected to reach US$ 133.44 billion by 2022, and digital-based healthcare is one way to bring access to rural areas in India which have less developed physical resources for healthcare. “This is indeed an extremely large market, where patients do deserve an extremely good experience,” Siddharth said. “And I’m a firm believer that India is one of the few countries where we are going to overcome whatever limitations that we have in physical infrastructure, through our investments in digital infrastructure.”
Intellectually Honest Leadership
Part of, if not all of, Pharmeasy’s success can be attributed to its leadership team.
“We have seen enough unicorns, young teams that end up being unicorns. So, we can see the pattern…the early signals, and I walked away feeling very impressed by you and your team,” said Hans.
Pharmeasy’s founding team includes Hardik Dedhia, Dr. Dhaval Shah and Dharmil Sheth. As Siddharth puts it, the four men have known each other for decades and are very familiar with their respective strengths and weaknesses. This knowledge and the honesty they share have allowed them to divide and conquer, each focusing on and perfecting parts that make up the sum of Pharmeasy’s operations.
It has also allowed each member to grow in their respective fields of expertise. “Each one of us picked up a part of the problem to solve and worked really hard at that. And that’s what’s allowed us to focus on growing ourselves,” explained Siddharth. “Internally, each one of us has now actually become a specialist on a certain part of the business. And…all of these fit well in a puzzle.”
That is not to say that the team does not have its disagreements. They simply resolve these with ‘a very, very solid codified dispute resolution mechanism’, according to Siddharth, who plays arbitrator when such differences in opinions happen. “We all know what we are not good at. We’re very honest with ourselves. We will rely on the team. And I think that’s what counts.”
This intellectual honesty also enabled them to make major leadership shifts and bring in fresh blood as domain experts as they scaled Pharmeasy to take on more challenges. Siddharth recounts the decision to have Dhaval, then overseeing operations, and Dharmil, who headed marketing and growth, to swap responsibilities.
“We took a conscious call that…we’re not able to do justice to this, and we need to swap the roles,” Siddharth related. Pharmeasy had just closed its Series B funding, a time where most startups would go for stability and expansion. “And we actually went ahead and did that…we have been honest to ourselves in terms of saying that, how can we do this or not do this, and we’re always challenging and questioning ourselves.”
