ENTREPRENEURSHIP | Siddharth Shah PGP-2012

Siddharth Shah (PGP-2012), Co-Founder & CEO, Ascent Health & PharmEasy

• Together, Ascent & PharmEasy (now merged as API Holdings) form the Largest Digital Healthcare Platform in India connecting Patients – Practitioners – Pharmacies. It is now the 3^rd largest buyer of medicines in India – accounting for 3% of all medicines sold in India. 
• Siddharth has raised ~1,500 Crores (USD 210 Mn) from leading investors across the world including Canadian Pension Fund – CDPQ, Bessemer Venture Partners, F-Prime, Eight Roads, Think Investments and Leading Indian Investors and delivered returns ranging from 40% to 85% IRR to his investors. 
• Ascent Health & Retail.IO connects 500 Pharma Companies through 1,200 Pharma Distributors with 45,000 Retailers in 35 Cities of India. PharmEasy is India’s leading E-Pharmacy, with over 5 Million App Downloads and over 700,000 fulfilled orders every month. 
• Within the PharmEasy ecosystem, Siddharth has developed a tele-consultation platform (DocStat) and practice management and digital clinic solution (DocOn). 
• He is a three-time National Karting Champion with 10 National Level Race victories. He was a part of an Indian Team that won the Country’s first 24-hour Asia-Pac International Kart Enduro Championship

You are one of the youngest awardees so far. What does the YAAA recognition mean to you? I feel honored, to say the least, that I get a chance to be recognized by the Institute. I’m very happy and delighted. I still think of myself very often on the other side as a student, because it’s not even been eight years since I have been out of campus.

What are your fondest memories from the campus? I think the fondest memories from campus are not just within the class, but also what happens outside of class. I have made some of my best friends over there. Also, it was the first time that I was away from home, as I was born and brought up in Mumbai. I always cherish the moments I shared with my dorm mates and friends from my section.

You have been a go-getter. What all did it take to be a good entrepreneur? I think that was literally a ‘trial by fire’, like we say in our mother tongue ‘अग्नि परीक्षा थी’ for a very long time. Also, I think it was the conviction of my family, more than anything. It was also the people that were with us since the beginning – the earliest employees, earliest stakeholders and earliest partners that took us through. So, everybody knows of the hockey stick curve that’s happened since 2015-2016 when we started growing, but very few are aware of the challenges we faced during 2012-2015.

A lot of people might not know, but I had formed the company while leaving the campus. I still have the presentation, which I prepared as part of a course under Prof Anil Gupta, where the project that I had undertaken was to start an online pharmacy in India. I have been one of the few people who started a company while on campus, thinking about an actual online pharmacy and how it would transpire into e-health and a single digital platform for out-patients in India. Even today, I am still following the same dream, with evolution on that path.

In the initial years, we faced a lot of challenges, as that was the time that had no concept of an online pharmacy, digitization in healthcare or anything that would change the status quo of healthcare that was almost similar for the last 20-30 years. Considerately, when the consumer industries like FMCG and Telecom were evolving drastically, there was limited innovation happening in the healthcare sector – meaning we had a lot of barriers to break and strong resistance to face. This phase was extremely difficult as there was vandalism at our hospital pharmacies, our associates beat up, goons being sent to my home, threats being given to my parents, demonstrations being carried against us and a lot more. In a way, this phase also motivated us to be headstrong with the thought that if we can break through this rigidity and resistance, the change we can bring would be drastic. From a real-time perspective, we started as dialhealth.com which failed, followed by Dial Health chain of retail stores which also failed. After two failed ventures, we drifted to our distribution business that was a success. So, on the back of our distribution business, we co-opted retailers and converted a B2B business into a business, where we had a B2B business but also got a demand for these retailers and started an online business. This was the entire journey of having a B2B business, working with more than 50,000 retailers in terms of one crore patients. But, it definitely didn’t start so grand. In reality, we had an idea, we knew this is what we wanted to do, but had no clue how to go about it.

Can you just give us an overview of the entire structure of the organization that you built and why was it able to grow so fast? So, think of it this way. Typically, within the healthcare space or the out-patient space, a large part, almost more than two-thirds of the money is spent by the patients on medicines. Within this, you have four critical stakeholders – pharma company, pharmacy as the retailer, patient and practitioner. Considering this, we have created a full-stack modelled digital platform that connects each of these interactions. Now, for example, at the back end, we have close to 2000 plus pharma companies and distributors that connect to over 65,000 retailers at the front end. Further, on a monthly basis, our platforms have a transaction value of over almost 600 crores in terms of medicines alone. So, the retailers are ordering 600 crores worth of medicines through our platforms, with a reach that has gone from 35 cities to more than 85 cities in the country. This makes us the Amazon equivalent for ordering medicines, but by retailers. Technically, we are solving for the supply of the retailers by creating a single platform, where we manage to buy medicines directly from the pharma companies, store them in our warehouse, handle the logistics & supply chain, typically deliver within 4-6 hours, provide credit, along with payment integration and payment reconciliation. This makes our platform an end-to-end solution.

In the next leg, we partner with the retailers, highlighting that we will not only help them with the supply, but also create demand. This demand comes from our App PharmEasy where the end users can place an order with a prescription. The order details go to the pharmacy within that zip code, based on certain algorithms like availability, turnaround time, rating and more. Following these initial steps, the medicine gets picked up and delivered to the customer.

I would also mention that last year we also acquired a platform called Medlife, which happened to be the second-largest e-pharmacy in the country. So, between PharmEasy and Medlife, we do close to about 200 crores of additional transaction, with more than 10 lakh patients every month and cumulatively more than one crore patients that are served. Now, this is the leg between the pharmacy and the patient.

Further, the next leg is between the patient and the practitioner, where we run the largest telemedicine platform in the country. In this leg, combining both PharmEasy and Medlife, we serve more than five lakh patients every month.

Furthermore, we also own the largest e-medical records platform in India, which today is with more than 6000 doctors, 3000 of them using it as their only means of communicating with patients. These doctors see anywhere between 6-9 lakh patients every single month.

So, we have created a digital ecosystem that connects each of these legs. We have also taken care of all use cases of demand and supply in simplistic terms, from a consumer perspective. Also, through our digital interventions, rather than recreating 10,000 or 30,000 pharmacies or their supply chain, we are instead focusing on reviving the physical infrastructure with our digital infrastructure on top. Here, the parallel example can be the global transition from cash to cheques, from cheques to card, from card to digital. But, In India, we went directly from cash to UPIs. I think, we are leapfrogging that in the healthcare context in the country, where we do not have any form of OPD insurance or digital space. Considering this fact, we are creating an ecosystem, where rather than spending decades/years to recreate the physical infrastructure, we are just overlaying the existing infrastructure with a digital infrastructure – to get efficiencies and make the consumer ultimately benefit in terms of access and affordability in healthcare.

India is a branded generics market with a fragmented supply chain of medicines. How did that work to your advantage? See, I think, being branded generic is part of the challenge and a big opportunity at the same time. Unlike the US or most developed countries, where the doctor prescribes the name of a molecule, in India, the doctor prescribes a brand. What this means is, let’s say, there are two lakh stock-keeping units (SKU) in India, with the average size of pharmacy being comparatively very small in terms of built area. By definition, the doctor or consumer will not get all the medicines required at a single pharmacy with access to probably 300-400 SKUs only. This is where we come in, being a single platform that would ensure that all the medicines are available at affordable rates. Similarly, for the retail pharmacies who would need to work with 100 suppliers to stock the medicines to solve the problem for the consumer – we consolidate at the back end, taking care of the supply & demand being a single point of connect for consumer/patient.

Here, the primary idea is to become a holistic point of care in the outpatient ecosystem. For example, if you are a patient with a non-communicable disease, you may be required to be on medicines for a lifetime, unfortunately. So, this would require you to visit the pharmacy multiple times for your medicines, with the pharmacy doing nothing beyond dispensing the medicines. But, once you are at our platform, we ensure that your tests are done on time, help you with annual diagnostics, supplements, the devices, and more – all at one place. At the base, we are becoming an adherence program for a patient to adhere to a certain medical protocol that ultimately is resulting in a better outcome.

What are the additional challenges you face in the e-Pharmaceutical space? I think the biggest challenge is that we still don’t have an insurance ecosystem in the outpatient space in the country, making people pay out of pockets for basic healthcare. We are limited to life insurance or health insurance, that waits for a catastrophe to happen. Globally, this insurance service is available, with a co-pay model. Considering the same, I think, we need to evolve to a model where the insurance is like a customized healthcare provider or payer for our health, where you’re transferring the risk for management of health, not only for an adverse outcome. This can be a tiered layer, where at a certain premium, you will get certain treatment taken care of. In the current phase, the patient’s non-affordability to pay for the out-patient services means that the health is not being taken care of at the preventive stage itself, further leading to a stage where catastrophe can happen.

So, we need to create a robust out-patient insurance program that will drastically change the way we look at healthcare in the country. But, here the problem can be the adjudication of that program, viz., prevention of frauds, giving real-time treatment as that cannot be centralised. So, here, you can create a digital footprint, leverage the existing infrastructure where technology can handle the real-time adjudication. I think this is the biggest challenge and the opportunity of our time in the country.

You are intensely focused on bringing radical reforms to the healthcare industry with the help of digital technologies. How do you plan to revolutionise this further? Our first focus was to integrate the supply for medicines because that is the largest part of the ‘out of pocket’ healthcare expense today. For example, for a patient living in a metro city, the cost of seeing a doctor can be Rs 500-2000/visit, the tests can be Rs 1000-2000/year, but the cost of medicines can be Rs 1000-2000/month. This means that the patient is spending 70-80% of the total expense on medicines and supplements. So, our first job was to create an entirely digital and integrated ecosystem for medicines, which is the largest component of outpatient care. Further and currently, we are thinking of expanding our scope to create a digital system where we can bring the tests, treatment, consultations and a lot more under one ambit – where the payment is not out of pocket, but as part of the out-patient insurance program. Hopefully, in the next 3 to 4 years, we are able to create impactful digital infrastructure and network where we can be the leading providers of all healthcare services in any zip code within 3-4 hours. Once we are able to achieve this, then we can create a smart layer on top of it for the payer or insurer. I think our objective is to go beyond transactions or a person who’s delivering medicines to a person who’s your adherence partner in healthcare in outpatient insurance.

According to you, what does it take to be a good entrepreneur in the current context? I think, the last year has taught all of us a lot of things, especially, humility, acceptance that a lot of things are not under our control and empathy. Also, these three things have come out strongly to a lot of people. In my personal experience, my mother had covid in the last week of June, she was hospitalised for some time and luckily recovered well. But, what these instances do is to really connect you back to reality, in terms of where you are and how you are. Secondly, due to the pandemic, people are not afraid to change their lifestyle or to rely on the way they connect through digital resources. Who would have thought that students at IIMA would take online lectures? Who would have thought that people would trust online consultations with their doctors? This phase, therefore, presents an outstanding opportunity for people to build models for the new India. So, if you have empathy, humility, along with passion, perseverance and pivot model – it can make a huge difference.

Basically, start-up cannot be your side fling, and just like in a game of poker, you have to be all in as there is no other way to play the game right. But, you also need to draw the line in terms of following your passion and have the right approach, simultaneously having the ability to pivot.

I believe that the venture ecosystem today in India is far more conducive than what it was when I came out and only gets better because, as people have more and more success stories, the ability for people to be able to get the capital required to implement their pilot will always be there. If people do not have a lot of liabilities on their head, I would strongly encourage them to start building and experiment when they are young, preferably as soon as they leave campus.

Partnerships also form the bedrock of what you built together with your co-founders. What are your views? I believe, without the support I received from my partner, parents, folks in the community, and especially my co-founders and the teams we got alongside – I would not have been where I am today. My first co-founder, Hardik Dedhia, is the smartest of all of us. He went to the US to pursue his Masters and started working with NetApp that was a dream job for many during those times. It just took a one-hour conversation with him for him to send a resignation email to the Founder of NetApp. He called his parents later to inform that he has resigned and would be coming back to India in a month. He literally took the flight back. We pursued our journey of dailhealth.com together.

It was a few months later that my second co-founder, Harsh Parekh, joined me, with whom we ventured into the retail pharmacy, followed by distribution. I was fortunate that my friend from school, Dharmil Sheth joined me in March 2015 to launch PharmEasy. A few months later, Dhawal Shah who was a friend in junior college joined in. We all knew each other for a long time and that meant that we were not double guessing each other.

What I would want to highlight is that it wasn’t just my family who was digging trenches with me, but Hardik’s family had mortgaged their only home for us. I wouldn’t ever encourage anybody to do something like this. So, long story short, the point is, you have to give your best and need support from people who will believe in you.

There were times when we did not know how we will pay the salary for the next month, but people helped us and we were not afraid to reach out for help. A big reason for our success has been grounded in that failure that when we were in bad times, it was the people who came and partnered with us. Even today, it is those partnerships that form the bedrock of our foundation. We are not recreating the supply chain, but we are partnering with 2000 distributors for the supplies. We are not recreating the retail chain, but we are partnering with 60,000 retailers instead. I think, the ‘ethos of partnership’ of leveraging what you have and building your ideas on top of that comes a lot from the early days of struggle and humility, where it is the partnerships that saved us.

Tell us something about your karting interest and what has been your most memorable experience so far. I would still love to cart today, but unfortunately, we don’t have a good karting track in Mumbai anymore. Also, one of my dreams is to create a great karting track, if not in Mumbai, but somewhere in the vicinity. So, my inability to kart is compensated through my immense passion for cars. But, in my view, karting had prepared me for what was to come in my life. Also, karting is one of the few sports where you get a chance to consistently prove yourself over a period of time, unlike most leagues.

In fact, Dharmil, who is one of my co-founders, has been karting with me professionally. So, we both used to sit on the same bench in the school, we raced together and now are partners.

If you excel in any sport, it transforms you into a fantastic business person. I think a large part of my success in karting was due to my prior success in skating. I still remember, my parents used to take me to BKC which was like a barren area, at 5 am every day, for two hours of practice under coach Mr Virag Patel. So, the killer instinct that came from my days in skating obviously helped me in karting.

For me, the most memorable day in karting has also been the scariest day, when my mother who had no clue about karting saw me driving at more than 120 km on the race track at the age of 12 or 13. She literally pulled me out of the track, which is two days before the first national race of my life. This is when, the General Manager, Mr Shirke approached my mother and gave her some confidence beyond the obvious petrification she had for my life. I came third in that race, but it became an insane validation as if someone entered Formula One. I still remember that I cried on the podium. I think, this is the most vivid memory that I have from my racing career.