Toss a strand of hair and trap a mountain! If you gain you gain a mountain. Or else you lose just a strand of hair.
The legend that is Dr. Velumani
The journey begins in a small village in Tamil Nadu. A boy is incentivized to go to the government school driven by the mid-day meal scheme. Back home his mother supports a family of 5 children from the income she makes from her two buffaloes. What the young boy lacked in resources however, he more than made up for in confidence and drive. At the age of 20, he came to Bombay (now Mumbai), got a job at BARC, got his PhD while working with the firm, and left the firm after 15 years of service to begin his own business.
Today, that small boy from Tamil Nadu got a 4,500cr exit! As Dr. Velumani says, there are two types of people in the world - the restless and KPM (Khaya, piya, mar gaya). And boy does it pay to be restless!
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PharmEasy x Thyrocare
PharmEasy has today is a well-entrenched pharma delivery application, with more than 5 million customers across 1,200 Indian cities. They operate on a simple disintermediation model - sourcing directly from the Pharma player, and passing the gains to the customer. In a market where the middlemen eat upto 40%, this can be a very attractive business, albeit a commoditized one.
Like with any commoditized business therefore - the game is in scale. As the business grows, it can drive better terms with its Pharma suppliers, use its warehousing and delivery more efficiently, while maintaining a better value prop for customers, maintaining a virtuous cycle. This is a brutal cash burning game however, especially when you have well backed competitors like 1Mg (Tata) & NetMeds (Reliance).
So what do you do - go back to the drawing board & strengthen your moats. One great advantage an e-pharmacy has vs a regular pharmacy is that they have your purchases backed against your customer profile. Side-stepping any data/oil cliches here, this data can be extremely useful - especially for chronic diseases like diabetes - where you could cross-sell glucose diagnostics tests. This helps you get more value from every customer while also making your relationship with the customer more sticky, both of which help increase the value you can generate from that customer over their relationship with you.
For Thyrocare - the incremental channel - as a preferred diagnostic partner, gets higher volumes, and better utilization levels, driving up margins! A win-win partnership all around!
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