IIM-K alumni build PinkBlue, a marketplace for clinical products

The idea of PinkBlue, a marketplace for clinical products, germinated in late 2012. In 2011-12, Valliappan tried to help his in-laws, who were into pharmaceutical distribution, setup a distribution channel for clinical products. During setting up a sales team to target the new market, he realised that the economics wouldn’t work out if he had a brand-specific sales force.

So he began researching a bit more, and found that the largest of dental manufacturers had 80 sales executives across the country, covering only 15 to 20 per cent of the market. There was no easy and convenient information on and access to products at clinics and hospitals in the country. Also, he noticed that clinics work with 20 to 30 vendors in order to get decent prices on all products. They also have to manage purchases and inventory across these suppliers and a few 100 SKUs, which is difficult.

Seeing this, Vallippan decided to create a platform that would take care of the clinical product requirements of clinics and hospitals across the country.

Solving a problem

"Healthcare institutions either ended up spending too much time and resources on getting to the right answers, or making several compromises for the convenience of working with one vendor. We wanted to give them the best of both worlds. Our overall thought process has evolved significantly since we decided this," says Valliappan, Founder, PinkBlue.

Actual work on the platform only began in late 2013.Valliappan got in touch with his friend Varun, from IIM-K, around this time. Due to his work, Varun had not been able to be reached until then. However, when they spoke for the first time after a few years in 2013, he was onboard almost immediately. In time after this, they built an ops management team and a delivery team.

"It has been tough, but we are happy that we have a good team in place now. We are around 10 people now, and growing continuously. We understand the market well now, and are looking for an experienced techie to join the founding team, and we want to start building the product, and the tech team, now," says Valliappan.

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What does PinkBlue do?

PinkBlue aims to build a super-efficient supply chain for clinical supplies in India. The idea is to build a platform that would bring thousands of manufacturers and tens of thousands of healthcare institutions, onboard, to make it easier for healthcare institutions to discover great products with reliable prices. It would also make it easier for manufacturers with good products to take these products across to a sizeable portion of the market.

The team is also working towards becoming the materials management partner of healthcare institutions, where they provide technological and commerce solutions to all healthcare institutes. Valliappan says that the supply chain for clinical supplies is complicated. It is driven by a large number of SKUs, technicalities, and the fact that almost all medicines have specific shelf-lives.

"We are trying to simplify this for our customers. Our solution would bring complete visibility to this supply chain, from the point of production till the point of consumption. This could result in value addition to the tune of 20 to 30 per cent of the market ($11 billion)," says Valliappan.

Braving the odds

Speaking of challenges, Valliappan says that they have faced all the operational challenges one could possibly face in an attempt to organise an unorganised industry. He adds that vendors don't know about their inventory, and do not have readymade price lists. "So there is a high level of uncertainty at the back-end, which we are covering, in putting 5000 SKUs online with their prices. Managing that is one of our biggest challenges," he adds.

The next challenge was managing delivery times. He says that their delivery times are expected to be even more stringent than those of top B2C players. The team delivers most of our orders within a day or two in Bengaluru. "Getting that right with a small team, especially when we do not hold 80 per cent of the listed products, is again a big challenge. But we are putting systems and processes in place which are making it easier for us to manage this. Also, we are getting to a position where we can replicate this, and across more segments, at that," adds Valliappan.

PinkBlue makes money out of every transaction via margins. The team intends to make a marketplace out of PinkBlue. "There are also the potential marketing budgets of companies to tap into as the platform grows in size," says Valliappan.

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The healthcare segment

Healthcare institutions spend eight to 10 percent of their revenue on materials, and the healthcare market is growing at a rapid pace. This would mean significant growth in market size in the short to medium term as well. Also, the global online B2B space will approach USD 6.7 trillion by 2020. At present, the Indian B2B e-commerce market is valued at USD 300 billion, and by 2020, it is expected to touch 700 billion.

Valliappan believes that, in most places, the clinical supplies market is highly consolidated. Citing an example, he says that in the US, the top two dental supplies companies account for over 70 per cent of the market share together.

In the clinical supplies space, the top two companies have more than $100 billion in revenue each. That kind of consolidation has not happened in India yet. "As per our research, there are not many organised players, and no one with any sizeable cross-geographic presence, or more than five percent of market share in any segment. That leaves the market open for consolidation through technology," adds Valliappan.

PinkBlue intends to expand geographically into a few other cities soon. Expansion into other segments is also on the cards. In the longer run, the team would like to cover the entire spectrum of healthcare (clinical supplies), and be present in all necessary geographies, in order to provide unmatchable response times to all their customers across the country.

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