By mid-2021 we aim to establish Generic Aadhaar outlets in 125 cities
Recently, an 18-year-old young entrepreneur, Arjun Deshpande was in the news since Ratan Tata decided to invest in his start-up Generic Aadhaar. Though it was a small, token investment, the fact that it attracted Mr Tata attention is noteworthy. The venture seeks to provide quality generic medicines from pharma manufacturers at a much lesser cost and increase accessibility to medicines across the country. Arjun Deshpande, Founder, Generic Aadhaar shares more details about his company's vision, and its company's expansion plans, with Usha Sharma
Tell us how Generic Aadhaar is different from the government’s Jan Aushadhi stores?
With Generic Aadhaar we have introduced a business model that can support multi-disciplinary medications. Our stores are equipped to sell all types of allopathy medicines. In a way, there isn’t much of a difference between the two stores. We are actually complementing the Government’s effort of making affordable medicines available to the masses. Our franchising model helps in generating gainful employment for the youth of the country and also in promoting entrepreneurship. While keeping in mind customer advantage, Generic Aadhaar ensures that small chemists and retailers earn the benefits of the business too. The medicines are given to the pharmacies at manufacturing cost which is then sold to customers, thereby reducing cost up to 80 per cent. We also collaborate with the manufacturers by increasing their supply as demand increases, which in turn, helps manufacturing facilities double their profits. Generic Aadhaar protects the interests of customers, retailers and manufacturers alike.
Though the Indian population would like to get medicines at lower prices, they still repose their trust in branded medicines. So, how do you plan to inform the masses that quality should not be equated with only branded medicines?
This is the most important factor that needs careful consideration. While affordability is key, acceptability remains a challenge. We intend to take the supply side, with whom we partner, in confidence and seek their support in educating consumers on how the quality and composition of generics is the same as branded drugs. We intend to partner with government agencies and regulators and conduct an elaborate consumer education programme by setting up dedicated medical camps for the purpose. We also run free medical camps on days of national importance such as January 26 and August 15. Generic Aadhaar outlets also help regular senior citizens and other customers with information on dosages, medicines and also remind them about taking medicines on time. The store owners give consultations to customers when they should refer to the doctors.
It is important that we inform customers that generic medicines are the same as branded medicines, the only difference is generic medicines do not carry a company name. These medicines are also manufactured in the same GMP-WHO approved manufacturing facilities. Generic and branded medicines are bio-equivalent.
How did you get an idea for this business and what is its USP?
During summer breaks, I used to travel abroad with my mother. While she attended seminars about the pharma industry, I pondered and questioned how the medicines manufactured in India are being sold at an affordable cost abroad. On the other hand, in India, the same medicines are sold at a higher cost which includes marketing and packaging costs. Thus, came the idea of providing generic medicines at an affordable price to customers while also helping small retailers. India is one of the biggest suppliers and manufacturers of generic medicines and we must make use of the full potential of our generic medicines industry. Generic Aadhaar aims to sell generic medicines to the masses at a much economical rate than the market price.
Recently, Ratan Tata invested in your venture. So how did he get interested in your startup? What are your business commitments to him?
We are honoured to have Mr Tata as an investor in our venture. Our commitment is to deliver a good return on investment (ROI). He has invested in our venture because he felt that our business model was impactful as well as innovative. Since Generic Aadhaar focuses on helping customers and retailers alike, he believes it is a better system than the normal B2B2C startups functioning in the country. Mr Tata believes in helping the masses of the country which coincides with the objective of Generic Aadhaar, to be able to provide affordable healthcare to the citizens of India.
How are you going to utilise the funds? Will there be any business diversifications from the raised funds? (please explain in detail)
We have plans for expansion of our stores across India. As of now, we will stick to our basic business model and not look at diversification. At the moment, we are eyeing an expansion into 25 cities of the country by December 2020. By the mid of 2021, Generic Aadhaar will be present in 125 cities. We are looking at a mix of Tier I and Tier II cities including Pune, Amritsar, Ludhiana, Delhi, Gurgaon, Faridabad, Noida, Chennai etc.
The other segment we will be focusing on is oncology products. The necessity of oncology products has increased over a period of time. We aim to sell these medicines at affordable costs to reduce the financial burden on customers.
Tell us more about the business model of Generic Aadhar
As stated earlier, my business model is to create generic medicines sales points to ensure the availability of affordable medicines to the masses. We will have a pan India presence with own stores as well as franchisees. Generic Aadhaar follows a unique pharmacy-aggregator–profit sharing business model to source generic drugs directly from the manufacturers. They are then given to the retail pharmacies, eliminating the 16-20 per cent wholesaler margin along with other layers of margins such as C&F agents in the trade. Over 30 retailers, who were finding it difficult to cope with the intense competition from established medical stores on one side and the deeply discounted sales strategy of online pharmacies on the other, have joined the Generic Aadhaar fold. The stores are offered a free face-lift with Generic Aadhaar branding, logo and the requisite IT infrastructure with links to the head office in Thane.
How is your business model different from that of other online and offline pharmacy stores?
The one most important differentiator is the fact that the inventory carrying cost is very low as compared to stores that also stock branded drugs. Since the stores are minimally designed, the overall cost of maintaining the business for franchisees is also lower. In addition, we help small pharmacies earn double the profits and stay relevant in the market with affordable Generic Aadhaar medicines. While other established pharmacies (offline and online)for example, buy medicines say at a cost of Rs. 100 and sell the medicines at Rs. 150, retailers affiliated with Generic Aadhaar get medicines at Rs. 50 and are sold at Rs. 60. Thereby reducing the expenses of retailers and customers by nearly half. This is also why the business model of Generic Aadhaar is unique and different from traditional businesses.
Since it is a new venture how are you planning to create awareness? And how will small chemists and pharmacies benefit from your business model?
We have already begun promoting the model through the stores we have set up. The other modes are through awareness programme for customers through our partner suppliers.
How do you source medicines from the manufacturers? Tell us about the quality checks you have put in place.
The raw material of the medicines undergoes a thorough analysis and ensure that their API quality before the order is placed. This process is followed before a bulk order is placed for manufacturing medicines under the name of Generic Aadhaar.
What are the measures you have implemented to adhere to regulatory requirements to maintain the supply chain? How equipped is your backend infrastructure?
We have a warehouse which is well equipped including cold storage facilities to store medicines. It has separate sections for liquid medicines and tablets. Each section is labelled and every batch of medicines that comes packed in a box which mentions the name of the medicine, quantity etc.
The warehouse is managed by a dedicated team of staff which stores and bifurcates the medicines to the franchise outlets with the help of the Generic Aadhaar software. As per the demand from the outlets, the medicines are shipped to them. As far as the manufacturing unit is concerned, a normal batch of medicines which are manufactured for Generic Aadhaar contains 5000 pieces. The quantity of every type of medicine varies depending on the demand.
During the nationwide lockdown, how seamlessly were your stores operating?
Since we fall under essential commodities there was no disruption for our stores. In fact, we have been fortunate to serve the nation in time of such a crisis. We have a contact number on our website, where customers can WhatsApp their medicine needs with a prescription. The closest store to the location of the customer is reached out and within two hours the medicines are delivered to the customers. We conduct home delivery once a week in the red/sensitive zones.
How many stores do you have and what are your business plans for the current fiscal? How are you going to execute them?
So far, we have opened up 35 stores which are located in Mumbai, Thane, Bangalore and Odisha. We intend to open up stores in 25 cities by December 2020 and by mid-2021 we aim to establish outlets in 125 cities, with presence in Delhi, Gurgaon, Faridabad, Noida, Madurai, Chennai, Odisha, Amritsar, Ludhiana and various cities of Maharashtra especially Pune. Generic Aadhaar will be present across the country by the next year.
The pandemic, unfortunately, slowed the process a little bit. But we will catch up soon. Moreover, since we also have the franchisee model the rate of store set up is good for us.
While looking at expansion, we will also be looking at increasing the product range by introducing oncology medicines.
With more Generic Aadhaar stores coming up, how much employment are you likely to generate?
Each store of Generic Aadhar needs a minimum of 04 employees, and by 2021, we will be giving employment to 1500 people, this includes franchisee and store level.
What are the requirements that need to be met by an applicant to get a franchise of Generic Aadhaar?
Generic Aadhaar ensures that the franchise is taken by an FDA licensed retailer. He should be a pharmacist, if not, he should appoint one before the franchisee is taken. The location and shop have to be the franchisees’, we provide the branding, IT support and medicines to the outlet.
Are you open to a merger or an acquisition?
As of now, we have no plans for this.