Startup Mantra: Strengthening the Healthcare Supply Chain
PUNE Imagine a platform where you can upload a scanned medicine prescription and the pharmacies bid for the order and in the process the end customers get the maximum discount. Launched by Pune-based startup Biddano, if this idea had succeeded a few years ago, the online pharmacy industry would have looked a whole lot different. However, the startup struggled to scale in the B2C model and had to switch to a B2B model of efficient healthcare supply chain management. Founded by Talha Shaikh and Ashok Yadav in November 2016, Biddano is an intra-city logistics platform serving stockists, distributors and pharmacies in 53 cities across the country. The startup also empowers these players in the healthcare ecosystem by offering them supply chain finance services and an e-commerce marketplace.
In the beginning…
Shaikh comes from a healthcare background with his family business of managing specialty hospitals and diagnostic centers. He graduated in engineering from the Sinhagad Institute of Technology in Pune and worked in a few IT companies before trying his hand at entrepreneurship. Shaikh started his own tech services company which he sold in 2016. With a background in fintech as well as healthcare, Shaikh was looking to make his second startup in the healthcare tech space. when he met his co-founder Ashok Yadav at a startup event in Pune. Ashok comes from a financial management, operations and investment banking background with over two decades of experience.
Shaikh said, “I understood the inefficiencies in the overall healthcare supply chain management, including lack of technology penetration, primary patient care, secondary patient care, management hospital systems, etc. When we started talking about these issues, I felt that with our complementary skill sets, we can build something to make the healthcare ecosystem more efficient.
Yadav said, “Shaikh was working full time on Biddano while I continued my work. We had agreed that he would run the business until we were able to raise funds.
The wrong “bidding”
Prior to the arrival of the big online pharmacy players, Biddano was trying to solve the problem of drug affordability without disrupting the ecosystem. In this business-to-customer model, the patient scans the prescription and uploads it to the Biddano platform. Pharmacies could then “bid” for the order and offer discounted prices directly to end customers.
Sharing his knowledge, Shaikh said, “Digitizing the entire healthcare ecosystem has been a difficult task. Pharmacists, resellers and health service providers have always been very traditional in terms of approach. Their propensity to adopt the digital technology platform has always been very low. They were skeptical of working with tech startups because they feared losing business.
“We wanted consumers to have more comfort and convenience and prices to be advantageous through local pharmacies. Today, anyone ordering via online pharmacies must wait at least 24 hours for their medication to be delivered. We would have reduced the delivery time from 24 hours to 35 minutes. But pharmacies did not realize that sooner or later consumer behavior would change. We were ahead of time. We anticipated what was going to happen, but the retailers we worked with didn’t realize it. We have learned a hard lesson,” he added.
Despite the inertia, Biddano had managed to gain quick traction and integrate around 500 pharmacies in Pune. This B2C model continued until 2018, after which Shaikh and Yadav decided to pivot.
Yadav says, “As a startup founder and entrepreneur, you always keep your eyes and ears open. We have identified other opportunities. We realized that retailers, both offline and online, were struggling to deliver services and products to consumers on time. The root cause of this problem was the way the healthcare B2B supply chain is managed. From a business perspective, it made sense to us because there were no players or technology companies focused on this market to organize it. We already had a technology platform that could connect pharmacies, resellers and distributors as well as a hyperlocal logistics network of our own. We knew the ecosystem so we decided to pivot and provide logistics services to resellers and pharmacies. »
Statement of the problem
In the offline world, whenever you walk into a pharmacy and the prescribed drug or other product is not available, the pharmacist asks the customer to come in at the end of the day and delivers the product. What’s happening in the backend is interesting.
To further explain it, Shaikh says, “Each pharmacy buys products from 10 to 20 different distributors or resellers. These resellers rely on their local couriers or couriers. But there is no reliable technology, tracking, coordination or solution available to them. Thus, the time taken to deliver drugs from a stockist located in Sadashiv peth to a pharmacy in suburban areas like Hadapsar is more than 12 hours. We thought there had to be a better solution.
“Each city has its own ‘dawa bazaar’ where all the dealers are located and which supply all the products to the pharmacies in a city. In the case of Pune, the pharmacy market is Sadashiv peth area. There is therefore a pick-up point and one or more drop-off points (pharmacies). Due to this inefficiency, the cost for the pharmacy and therefore the end consumers also increases,” Shaikh said.
Shaikh and Yadav realized that this market gap could be filled with the Biddano platform. This is when they pivoted their business model.
Yadav says, “The B2B healthcare market was even harder to break into than B2C because the mindset of resellers, distributors, pharmacies and brands was very different. Understand industry nuances like moving a product within certain parameters, temperature control products, ice packs, insulin injection, hospital supplies, etc. took us a while. Chemist Association Pune District (CAPD) was one of our earliest supporters. We started with a surgical and generalist stockist in Sadashiv Peth called “Krishna Agency”. Their main supplies were for hospitals, but they gave us entry into that B2B market.
Shaikh said, “It took us 10-15 visits to onboard a reseller and get the first 10 orders. We have onboarded other resellers through referrals because this is a close community. Even though our customer acquisition cost was very low, we still had a significant burn as we had to match prices and advertisements from local courier companies that operated in this ecosystem. Running the business at the corporate level with local expenses is difficult. We had to close that gap and now we are very close.
Biddano is now revolutionizing offline pharmaceutical distribution networks by bridging supply chain gaps between distributors and chemists with technology.
“Healthcare Logistics Platform” was the first product launched by Yadav and Shaikh at the end of 2018. They found the product suitable for the market within six months. After moving from the Pune market to the Pimpri-Chinchwad market, the founding duo started approaching investors.
Sharing his experience as an investor, Yadav said, “Initially, for two years, we started and put our own money. We both didn’t have a start-up network and didn’t know any investors. The only thing we had was a belief in the business. We knew it was a scalable business. I used to send LinkedIn queries when I was working in the office. I connected with people, gave them a basic introduction and handed over to Shaikh. He used to meet them then. The first person to entertain us was ex-Infibeam co-founder and Angel Investor Sachin Oswal. We called a meeting and he blasted us left, right and center. He was testing our levels of patience and conviction. The next day he sat in the office for two hours and helped us with the PowerPoint presentation and the business model. He introduced us to the first investor, the country’s leading health influencer, Dr. Ashwin Naik, ex-co-founder of Seraniti.
“We met Naik in Aundh. Shaikh opened his laptop, but Naik told him to close the laptop. After two hours of talking to him, without watching PPT or anything, Ashwin offered us ₹25,000,000. He was the first to believe in us,” Ashok recalls.
According to Shaikh, “You can change consumer behavior in terms of buying products online, but you cannot change or influence decisions about what products they want to consume. No matter how much information you put on websites, unless the doctor recommends a particular product, consumers won’t buy it. This is how the Indian mindset and market is. We understood that thought process and thought about leveraging the existing network of one million pharmacies and resellers, and then creating technology solutions to make the systems more efficient. With efficiency come profits, cost savings and other benefits.
Revealing their future plans, Yadav said, “We are launching our own SaaS ERP that will ensure that every pharmacy and every pharmaceutical distributor uses a single platform across the country. This will help reduce the wastage of medicines. Today, three percent of waste costs us approximately ₹3,000 crore.