How a 17-year-old student is helping eliminate middlemen from medicine sales

How a 17-year-old student is helping eliminate middlemen from medicine sales

Arjun Deshpande's unique pharmacy chain Generic Aadhar sells generic medicines to the masses at much cheaper rates than the market price

Arjun Deshpande Arjun Deshpande

Most of India's young entrepreneurs come from the IT sector, and not many from the pharma. However, a 17-year old 12th class student Arjun Deshpande is different. Earlier this year, Deshpande founded a pharmacy retailing chain Generic Aadhar with an aim to sell generic medicines to the masses at much cheaper rates than the market price (generics are sold at almost 40 per cent premium to the ex-factory cost).

His unique pharmacy aggregator business model is to source generic drugs directly from the manufacturers and give it 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. Already about a dozen retailers, who were finding it difficult to cope with the intense competition from established medical stores on one side and the deep discounted sales strategy of online pharmacies on the other, have joined the Generic Aadhar fold. The stores are offered a free face-lift with Generic Aadhar branding, logo and the requisite IT infrastructure with links to the head office in Thane. The Generic Aadhar has about a dozen employees, which includes pharmacists, IT engineers and marketing specialists who 'educate the customers' on generic drugs and its advantages.

"We started operations in March. Our average monthly revenues of branded stores have doubled as drugs are sold at much cheaper rates than  those in their neighbourhood pharmacies," says Deshpande, who often bunks his school for 'business and networking'. Currently Generic Aadhaar has tied up with four Mumbai-based WHO-GMP certified manufacturers to procure drugs with over a dozen medical stores in Mumbai and Pune joining the franchisee network. "We have a profit sharing model with the pharmacies and already Generic Aadhar has done over Rs 40 lakh business," says Deshpande, who has been shortlisted for the Thiel Fellowship in Silicon Valley, a two-year program for young people who want to build new business ideas.  

Over the next three-four months, plans are to extend the franchisee pharmacy network to 30-40 pharmacies in Maharashtra, Goa and Gujarat. Deshpande says he started the business with funding from his parents, who have their own business ventures. His mother runs a pharmaceutical marketing company, which sells drugs in international markets and father runs a tour and travel agency.

"The next round of expansions will require about $3-5 million and a leading well-known retailer has agreed to invest as a strategic investor, which may happen over the next few months," says the young entrepreneur, who got this business idea while travelling with his mother during a summer vacation to the US, Dubai and a few other countries to attend pharmaceutical trade events. "India provides generic drugs to the world and in many of those markets, the margins are much lower than what they have in India," he says.

Besides scaling up the business and increasing the product basket, Generic Aadhar is also developing a dedicated IT platform for drugs sales so that drugs can be ordered online and delivered within 'two hours' from the nearest Generic Aadhar pharmacy.

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