We can fix unavailability of medicines: Pradyumn Singh

India is a prescription-led market and distribution in the Indian pharmaceutical sector is very fragmented. There are close to 10 lakh retail shops and 65,000-75,000 distributors across the country. It is, hence, very critical for stakeholders in the value chain to know about their supply chain and market inventory. Pradyumn Singh, co-founder and CEO, Pharmarack - a business to business (b2b) software as a service (SaaS) based start-up, says that currently, the sales and supply chain, right from the pharma companies to distributors to pharmacists, is human intensive and full of redundancies. In conversation with Ashish K Tiwari, he talks about how his company is solving these problems. Here's the edited excerpt.

What is so unique about your offering for the pharma industry?

Be it the pharma companies, distributor or retailer, all stakeholders have their own pain points when it comes to distribution of pharmaceutical products. We have, hence, designed a product that will automate the entire sales and order processing operations. There is a clear need gap to address this problem in the Indian pharma market that's pegged at Rs 1 lakh crore while the parallel unaccounted counterfeit market roughly stands at Rs 25,000 crore. Interestingly, returns to pharma companies as expired goods currently stand at 5%. However, these returns could also be due to the growing size of the counterfeit market that's selling similar drugs. It's a direct loss of sales for the organised players and a clear case of right medicine not reaching the right destination.

Our subscription-based plug and play application platform caters to the needs of distributors, enabling them to place their orders directly with the company through an app or internet portal. Its benefit is that while placing the order they know the exact quantity to expect and by when, which is currently missing as the orders are placed with a salesman who notes it down in a physical format, goes about collecting the order before delivering it to the distribution company. The current process is obviously time consuming and delays the entire sales operation chain too. Even large corporation/pharma companies have tedious order-processing operations, which we reduce by intelligent interacting systems.

How does your system handle discrepancies in the supply chain?

We have a simple application loaded at the distributor's end that makes life simple for everyone. A salesman who generally is not from medical background goes around collecting orders from chemists. His livelihood depends on the number of chemists he is able to service. After collecting orders, he comes back to distributor to process them only to find many medicines ordered are not available. Our application can fix the problem of unavailability of drug for a retailer as all distributors are connected on Pharmarack's platform. Now, when a salesman goes to collect an order and a particular medicine is asked for he knows its availability and can give better service effectively and efficiently.

The system has also opened doors for distributors mainly to expand their service areas since they don't have to depend on human interface to accept orders, and can now do it at a click of a button. Choose a pin code you want to service. This way all the pharmacists in that area will be visible to you and you can connect and start interacting with them. This has taken off in a big way in tier 2 and 3 markets where the gap between placing an order and fulfilling is 30%. Our bounce rate is at 30% too which means that pharmacists are able to service 30% more patients who come to their shops.

How do retailers benefit from this system? Do they have to pay to use it?

We have a similar application for the retailers as well, which is like a Linkedin network. No, they don't have to pay for using it. There are close to 10,000 retailers on our platform at present and approximately 50% are active, which means they regularly place orders through our platform. The rest are new on this technology so they are taking their time to understand the product and its various features. Retailers can check on the app, if the medicine is available with the distributor or if it's available elsewhere in the nearby distributor network. Besides, the system has lots of other features like schemes, discounts and outstanding that helps in managing the business more efficiently.

But aren't pharma companies already using a similar system already? Why would they need your system?

It is very difficult for a pharma company to reach the last mile pharmacist without human intervention. The only way they can do this is through their medical representative (MR) network. As an MR, you connect with the doctors to generate prescription. According to research reports, an MR can visit a doctor probably every week or every fortnightly but when it comes to distributor, maybe just a month that too just to get feedback. A pharmacist in the entire supply chain is hardly touched upon by the companies. To reach out to one million retailers in a day, company would need workforce of one lakh, which is not practical. This is a structural problem that a single guy cannot reach so many retailers and you cannot recruit people in thousands/lakhs to reach out to millions of retailers. So, the only way pharma companies can reach out to pharmacists is a digital one. Currently, there is no solution to connect with the pharmacists directly using a digital medium.

So your system compliments the MRs or makes them redundant?

It certainly is complimentary. Now the MRs know where the loss of sales is happening and can go to that particular point and plug it. Even distributors will appreciate a more efficient team of MRs or salesmen coming to them for order collection. The system doesn't make the MRs redundant. Now pharma companies can train them better and use their skills for a whole host of other functions. Well trained MRs can now educate the pharmacists better and push for new products, etc. We are not aiming to be a replacement, specially in India where relationships are highly valued in business. We are just strengthening the entire supply chain by giving necessary tools to the people involved in it.

How do you fair versus competition in this business?

There are other start-ups trying to address this problem using different approaches and business models. However, due to the head start we have in terms of number of retailers and distributors on our platform, we are able to maintain a lead. You won't find more than 10,000 retailers and 700 distributors interacting with each other across regions. With presence currently in Maharashtra, Gujarat and North of Karnataka, we are the largest in this segment processing 12,000 orders every day in a b2b space.

How many distributors use the enterprise model and pay per order model?

It's a 65:35 ratio between enterprise plan and pay per use. We will see it changing in favour of enterprise plan further as we launch in new cities and distributors get a chance to understand the working of our product better.

Which other markets do you plan to enter in the near future?

We will soon be starting in Hyderabad and Bangalore and aspire to ripple out to entire Andhra Pradesh and Karnataka. The plan is to reach 25 cities this year and further strengthen the network by bringing 5,000 distributors and 100,000 retailers on board. We are trying to focus more on concentrating a particular area rather than go on grappling more and more cities and being the 10% of that market. We try to achieve a majority of the medicine order market in whichever area we enter within six months of launch. We ensure that large distributors and retailers are on our platform. Due to our large connect within the ecosystem, we are also generating relevant analytics to further build on the tech. Going forward, analytics generated through different transactions will be used to service our distributors better.

You recently signed on multinational pharma company Merck Sharp and Dohme (MSD). Are there more such deals in the making?

Yes, talks are currently on with large pharma companies to use Pharmarack services for an efficient supply chain management (SCM) and product/brand launches through their network of distributors and retailers. We should be signing up at least 15 large pharma companies this year.

How much business is the venture currently doing?

Since inception 18 months ago, we have enabled business worth Rs 675 crore. We are currently clocking in an annual run rate of Rs 750 crore. The target is to achieve Rs 3,000 crore in next 12 to 18 months.

Would you be raising more funds this year?

So far, we have raised two rounds – seed funding of $280,000 from Unicorn India Ventures and pre-Series A of Rs 4.5 crore from Currae Healthtech and Unicorn India Ventures and the biggest Pharma logistics company in India. We are in talks with potential investors for a Series A round. The funds will be used to upgrade the platform and hire more people to support our expansion plans.