Pradyumn Singh, Kushal Bhandari, Anupam Sarawagi and Bhavik Parmar became friends through a professional network. Kushal, whose family is in the pharma distribution business, designed a simple order processing app to keep a record of the medicines his business needed to stock, sell and order from pharma companies. The idea mirrored a business opportunity that appealed to the four friends, and they started working on the various versions of the app.
A chemical engineer, Pradyumn has worked in the financial services sector across verticals such as marketing, sales and trading.
The process of building the product made the four delve deeper into the supply chain market and unearth the problems plaguing the pharmaceutical distribution market. Pradyumn says that with around 65,000-plus distributors and close to a million pharmacies, coupled with the advent of new intermediaries, it’s obvious that the market, despite being highly regulated, is also highly unorganised.
The question of how to organise it led the team to brainstorm over the problem areas in pharmaceutical distribution, and finally zero in on the idea of automating the healthcare value chain, starting from order processing and inventory management, to centrally aligning pan-India pharmaceutical retailers, distributors and companies.
Founded in September 2015, Pharmarack is a software-as-a-service (SaaS) based application that bridges the gap between pharmaceutical drug manufacturers, distributors, local pharmacists and pharma e-tailers. It allows medical manufacturers, distributors and retailers to register or download the app and subscribe to the required plan from a pool of services that it offers. Says Pradyumn,
“Our technology is highly interoperable with any CRM, accounting and business software, and provides live market feed, analytics and business reports. In a short span of about a year-and-a-half, Pharmarack has brought on board 10,000 retailers and 600 distributors in 35 locations across Maharashtra, Gujarat, north Karnataka.”
He added that by leveraging the platform, drug manufacturers can have clear visibility of inventory across geographies, ensure the availability of inventory within their warehouses and markets, avoid stock-outs and sales loss. They can also utilise the platform for efficient marketing and sales initiatives and use the market information to set relevant production targets. Distributors can optimise resources, increase topline, reduce cost of sales, analyse business on the go and take informed decisions. Retailers can gain product knowledge, business offers and avoid sales leakages due to unavailability of drug and stock-outs.
Pharmarack has raised two rounds of funding so far – seed funding of $2,80,000 from Unicorn India Ventures and pre-Series A Rs 4.5 crore from Currae Healthtech and Unicorn India Ventures. The company is currently looking to raise Series-A round.
Initially, the founders pooled in their savings to run the company. But they soon felt the need to raise money when they realised they needed to scale their product. The task of making people understand the B2B business model was not as easy for them as the consumer-facing business is for others. Highlighting the positive aspects of the B2B business, Pradyumn says that B2B-aligned tech businesses are more stable in nature, and less capital-sensitive, therefore cash burns are more easily controllable.
Pharmarack Technologies' revenue model is subscription-based, where customers can either opt for a flat fee that can be paid on a monthly basis, or they can opt for the pay-per-use model.
The startup claims to be growing around 15-20 percent month on month in terms of revenue and the subscription renewals are at 100 percent. With 50 employees, Pharmarack is present in 40 locations, spread predominantly across Maharashtra, Gujarat, Andhra Pradesh and Karnataka.
Pharmarack, which is currently present in a couple of states, is set to launch its services in Hyderabad and Jaipur this year. Along with geographical expansion, creating a pool of significant number of distributors and retailers is equally imperative. The pipelines of expansion plans include bringing 5,000 distributors and 1,00,000 retailers on board. The company claims to have an annual run rate of Rs 750 crore and targeting around Rs 3,000 crore in the next 12-18 months.
According to a report by India Brand Equity Foundation (IBEF), the Indian pharmaceuticals market grew at a CAGR of 17.46 percent during 2005-16 and is expected to expand at a CAGR of 15.92 percent to $55 billion by 2020. The Indian pharmaceutical sector accounts for about 2.4 percent of the global pharmaceutical industry in value terms, and 10 percent in volume terms.
Looking at the size of the market and the pace at which it is growing year on year, there ample opportunity for Pharmarack to scale up and spread its wings.