Vivek Tiwari, CEO, Medikabazaar, shares his views on medical procurement systems followed in India and talks about his business plans for healthcare
Tell us about your current business expansion plans?
We have six full-fledged fulfillment centres and we do business across 16000 plus pincodes in India. We have 15,000 medical centres across tier II and III cities and around 50,000 doctors have also registered on our portal. Primarily, we do B2B transactions. So on a unit economic basis we are a profitable company and growing as well as spending heavily on our expansion. We are soon going to raise our second round of funding and that is how our scale of operation will move further.
Who are your current investors and who will be your investors in the second round?
So in pre-series A our venture partners weree- a Singapore and Japan-based VC company, two Indian angel investors-Sunil Kalra and Arun Venkatachalam. These are two very active healthcare start-up funders who fund Series A to Pre-series funding. Our current investors will also be part of second round of funding with a few more international and domestic funds. We are planning to raise around $6-8 million. These funds will be utilised for domestic expansion.
Are you looking to expand your business abroad?
India is a huge market and I feel we haven’t yet touched its surface. We will not look at expanding abroad.
There are many healthcare digital platforms coming up in the B2B space. How are you carving your niche?
We are a vertical B2B player. We do not consider ourselves as horizontal B2B business. Our focus is into the healthcare space, predominantly in the medical institutions. We believe that this segment has immense scope for future development. It is a very engaging segment where customers’ focus plays a major role in determining the success of platforms such as ours. We are also looking at expanding our services to become a full-fledged service provider and not just a market place. We are looking at getting the procurement business as well-both devices and pharmaceuticals. It has great market growth which will add value to our current business. So, I think that is our differentiator.
Tell us about your plans in the procurement business.
We are developing a tool that will take care of procurement of medicines and medical devices. It will help hospitals manage inventory and rationalise their working capital. In India, procurement planning is really bad. There is no standard system in place and so systematic procurement planning, execution and inventory management will enable the industry to bring in the much needed standards. I feel that the industry needs a system based on AI and not general algorithm.
Why do you think AI will be a great enabler here?
Procurement has to be based on a hospital’s consumption pattern and not on assumption. AI will help in dissecting and tracking the consumption patterns of each hospital and then provide data which is more relevant as well as give a clear picture of the demand. So, this is based on predictive analysis which will help organisations to understand their real needs and can build a systematic process. It will also help organisations build an efficient inventory management system resulting in better performance outcomes.
How does your procurement platform impact the operating cost of hospitals?
We will provide this service for free. This is a full line value add service that we will offer to our customers. Which is why I spoke about engagement, this service will not only allow them to buy products, but will also allow them to manage their inventory, reduce the cost, in turn helping them to make profits. The share of medical supplies within a hospital accounts to around 15-16 per cent, not counting pharmaceuticals and medical equipment. Manpower has the highest cost component. Well, hospitals can’t reduce their cost on manpower but even a cost reduction of 1-2 per cent on unwanted medical supplies will make a huge difference on the bottom line.
Indian hospitals today are struggling to manage finances. How do see their inventory cycles impacting their bottom lines?
Sometimes, hospitals end up buying so many supplies which they may not even require. If these hospitals do a deep down analysis of their inventory cycles, they will understand that few items have been bought for years and few items do not last for a week. So, if you do a rationalisation of their inventory, one will come to the realisation that hospitals are blocked with huge inventory and corresponding working capital. If that can be released and rationalised then surely it will boost their profit margins.
So, how does a company like Medikabazar improve procurement systems within the public health sector?
We want to help government in making better procurement decisions with more awareness and help tender authorities with price validation systems. We think government through our platform (medical devices tender validation tool) can build a strong and quality procurement system.
What we offer is a systematic, transparent process that connects each link in the procurement system; making the process efficient, cost-effective and resourceful.