This 17-year-old founder's pharma startup is taking on ecommerce firms to keep small retailers in the pink of health
Thane startup Generic Aadhaar helps small pharmacies and retailers source generic drugs at lower costs, and helps them to increase their margins.
Thursday October 24, 2019,
5 min Read
Not many teens are aware of pharma factories and how they function. But by the time he turned 14 years old, Arjun Deshpande had visited more than 20 plants with his mother, who was in the pharma trade. During those visits, Arjun, a computer enthusiast, and his mother spoke about the medicine business in India.
He soon learnt that India was one of the few countries where generic drugs were as expensive as branded medicines. The reasons were two: lack of awareness among people and the fact that the wholesale industry sought high margins from small retailers, increasing pricing for consumers.
Arjun decided that it was high time that medicine was made available at affordable costs to people who needed it.
In 2018, he founded Thane-based Generic Aadhaar, a pharma startup that provides generic quality medicines from reputed pharma companies at up to 80 percent lesser prices. It offers a huge portfolio of branded, generic, homoeopathy, and Ayurveda medicines from government-approved manufacturing facilities.
“I found that generic medicines are often promoted in the market as branded medicines and sold at unnecessarily high prices. This is due to brand promotions and advertising costs; this extra cost has to be paid by the customer,’’ says Arjun, now 17-year-old.
His aim, he says, was singular: to bring down the cost of medicine.
Over the next three years, he borrowed Rs 15 lakh from his family to build Generic Aadhaar. The startup now works with over 25 stores in Mumbai region, sourcing drugs directly from WHO GMP-certified factories to bring down the cost of generic medicine for consumers and lets small medical stores increase their margins by using the Generic Aadhaar branding.
Generic versus branded
But how do generic medicines differ from their branded counterparts? Generic drugs are copies of brand-name drugs with the same dosage, intended use, effects, side effects, route of administration, risks, safety, and strength as the originals. Their pharmacological effects are the same as those of branded medicines.
Generic medicines are cheaper because manufacturers do not need to put in expenses to develop and market a new drug; they can apply for permission to make and sell generic versions as the drug’s patent nears expiration.
In India, 80 to 90 percent of drugs are generic medicines and have been manufactured at very minimum cost, but the cost advantage does not reach the end customer.
Keenly aware of this fact, Arjun decided to use it to build his startup and benefit small pharmacies and the common man. The price of medicine at Generic Aadhaar is only 20 percent of the market price.
Arjun’s first clients in early 2018 – at a time when he was testing the product before founding the company last year – were his grandmother and her friend. His grandmother used to take a brand-name medicine for diabetes every day, paying Rs 335 for 10 tablets. The same medicine in generic version was available for Rs 100 per 10 tablets.
He soon realised that this price discovery model could be scaled up. He convinced his family to put in Rs 15 lakh investment, and formally launched the business in April 2019.
Generic Aadhaar supports individual-owned medical stores struggling to survive in a world of medical malls and online pharmacies. The startup aggregates medical stores, and brings them under the Generic Aadhaar umbrella to ensure that they are ushered into the digital era. It also lets retailers use technology to order and sell the product. The idea is to bring down medicine costs down by “owning the upstream and downstream distribution”.
“We are creating an ecosystem in the pharma industry. We franchise our brand, Generic Aadhaar, and we train the store owner to source quality medicines from manufacturing sites. We also help them market their stores and offer ecommerce capabilities. We have an online pharmacy that offers two-hour delivery at a customer’s doorstep,’’ Arjun says.
Today, it is a self-funding the business, but does not wish to divulge details regarding turnover or revenue.
However, he is working with over 10 manufacturing companies and planning to scale his technology and distribution business across India to more than 1,000 family-owned stores in three years.
The way ahead
According to IBEF, India’s pharma industry is valued at $55 billion and is growing rapidly. The business model for Generic Aadhaar is B2B and B2C. The startup buys directly from manufacturers, and brands and franchises drug stores. This makes it an asset-light model as the partner store takes the risk of inventory. The business model is to bill retailers on the percentage of sales.
The 25 stores he has tied up with today get 3X the business they were previously.
In the next one year, Generic Aadhaar plans to expand in 35 cities across Maharashtra, Goa, Karnataka, and Gujarat, and aims to have around 200-plus stores and online pharmacies.
He is taking on funded startups such as 1MG, NetMeds, Medplus, MedLife, and PharmEasy.
However, it’s the approach that Arjun is taking - saving family retailers and ensuring that they stay in the pink of health – that stands out as a powerful narrative in a country where small businesses are being wiped out by ecommerce companies.
“There are more than one million pharmacies or retailers in the country, and that is our market,” Arjun says.
(Edited by Teja Lele Desai)