Being chased out of hospitals didn't stop these founders from building a pharma supplies startup

Health-tech startup Medicento, a one-stop supplier for pharmacies, was started by two Bengaluru-based entrepreneurs who burnt their fingers scouting for potential customers.

Orissa-based Arpan Debasis was a chemical engineering student at MSRIT, Bengaluru, when he lost his father to an illness. The year was 2011, and Arpan decided that he needed to help bring about change so no other lives were lost due to the lack of medical facilities and difficulty in procuring medicines and homecare services.

Cut to eight years later. Arpan, 29, and his friend Rahul Vidyarthi, 28, run Medicento, which delivers medicinal requirements to pharmacies so customers can obtain them easily. The Bengaluru-based startup functions as a single point of contact for retailers and helps them keep inventory up to date.

But building Medicento took time. After graduation, Arpan worked with Zuari Fertilisers and Chemicals Ltd. in Goa and later in the UAE. He also worked at an online marketplace for cars as sales head. However, the desire to start up remained strong, and he soon connected with his friend, Rahul Vidyarthi, a computer science graduate who worked in digital marketing. His idea back then was simple: consumers need medicines, and retailers need customers; let’s connect them.

With an investment of Rs 20 lakh (from their own savings as well as family and friends), Medicento was incorporated in September 2015. Some of Arpan’s colleagues at Zuari also joined the team. In June 2018, Gitesh Shastri - who was just finishing his final year of engineering - joined them as co-founder.

Medicento began with a B2C model – the users could send a prescription on WhatsApp, and the startup delivered medicines in three hours. Medicento provided 10 percent discounted prices by collaborating with retailers.

Since hospitals don’t offer discounts on medicines, Arpan went to hospitals to canvass patients in the first year. He recollects, “I also went to restaurants and temples to talk to potential customers, especially elder people. I put up posters in front of hospitals, giving our number. I even ended up being thrown out from some hospitals for talking to their customers about us.”

As a bootstrapped startup, Medicento’s luxuries were few. Arpan himself used to deliver to customers. “I used to do door-to-door campaigns. I was even banned from an apartment building as I was there very frequently,” he says. In the initial months, Arpan offered home tuitions, which earned him up to Rs 60,000 monthly, to sustain himself.

By then, the online pharmacy had grown into a sector of interest for investors. Arpan says that although quite a few investors reached out to them, nothing materialised. “They inquired about the business idea but wanted to bring the cash only after three-four years. One investor actually told us – you don’t have a product; you need tech,” Arpan recounts.

Many twists and a turn

As time passed, a pivot was inevitable as the retailers in their network could not fulfill the customers’ demand for medicines on time.

Arpan explains, “Pharmacies usually depend on seven-eight distributors for their stock. If they are out of stock, the retailers are at a loss. We needed to fix the supplier-end first to make the business viable. We wanted to channelise the flow of medicines to retailers, so customers could access them at any time.”

Medicento chose to replace the B2C model with a B2B one. Medicento’s app now acts as a single point of contact for retailers, who otherwise have to approach multiple distributors with their notes on essential inventory.

However, big distributors showed little interest in Medicento, which could provide them business only for around Rs 20,000 while retailers could offer business worth Rs 1 crore and more.

The founding duo decided to on-board smaller distributors, aiming to be a one-stop supplier for pharmacy stores. They automated the process of collecting data with an app instead of distributors’ salesmen going to pharmacies to collect data from retailers. The retailers just need to upload their inventory; Medicento takes care of the rest.

“Manufactures get data only from the distributor about sale, not customer consumption data. We fill this gap between the manufacturer and retailer. It also eliminates the issue of counterfeit drugs since distributors often source from multiple brokers,” explains Arpan, claiming that Medicento enables smaller manufacturers also to reach out to retailers.

Medicento’s revenue comes from the commission from the distributor partners.

But on-boarding retailers to their online channel wasn’t easy. “We wanted to give an experience like Flipkart and Amazon do to our clients. But they had a traditional mindset and were dependent on the convention of keeping a notebook for stock details. So we asked them to do a trial with us for seven days. They liked our service so much that they started eliminating other distributors. Some distributors even contacted us saying we were destroying their market!” Arpan recalls.

Medicento kept their margins to a minimum (seven percent), thereby giving better prices to retailers. They have got more than 20,000 orders so far, with an average order value of Rs 2,500.

Medicento is a team of eight people, across product, operations, and marketing. Since the attrition rate is high among delivery staff, they have leased bikes and trained two delivery boys who even went on to on-board more pharmacy stores. Deliveries happen in two slots every day to the pharmacies.

What is next for Medicento?

Medicento is in the process of building a foundation with pharmacies. “Once we have more than a thousand retailers on our network, we can approach brands directly. At present, we have 300 pharmacies, and about 3,000 orders per month,” Arpan says.

Earning Rs 2 lakh per month at present, Medicento aims to generate Rs 10 lakh a day – about Rs 3 crore per month – in the next three months, after expanding to four more major cities.

 The startup has come up with more ways to generate revenue. They plan to sell the complete ERP system to pharmacies, and sell actual consumption data to manufacturers. According to Arpan, they will also monetise through ads on their app as well as share space in their warehouses.

The operationally profitable startup is now in talks to raise funds from VCs.

Arpan says, “We closely observe unit economics and make major amendments at the ground level, which can later define an absolute growth trajectory. Our primary focus is increasing the order size per pharmacy and be the sole supplier for a pharmacy.”

Medicento currently provides only patented medicines (from brands like Cipla, Abbot, etc.). Generic medicines and equipment are also in the pipeline, but the startup aims to strengthen and organise the supply of patented medicines first. “Patented medicines always have a demand in the market, which acts as an added advantage to on-board retailers (who are our primary customers),” Arpan says.

Medicento has also partnered with IIT-Madras and IIT-Kanpur for product development. The team is mentored by Rabnawaz Sheikh, Founder of Ataura Business Centre in Bengaluru, from where the team operates.

Although Medicento competes with Pune-based Pharmarack and Bengaluru-based Retalio, Arpan claims that their major competitive edge is the network of pharmacies. “Medicento has a pull-based mechanism (retailer-centric). We provide an end-to-end solution; we are not just another order management system,” Arpan says.

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