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Generic Aadhaar's innovation stems from its goal to make medicines affordable, available, and accessible to all Indians. Their primary innovation is their model of operation in which they act as pharmacy aggregators. Initially, this was by distributing to retail pharmacies. However, Generic Aadhaar has since expanded into franchising and setting up Generic Aadhaar shops. Their most recent disruptive innovation was their online mobile application to connect generic drug retailers to customers digitally.
The need for a business such as Generic Aadhaar stems from the high prices in the Indian pharmaceutical market. Our interviewee, the founder of Generic Aadhaar, Mr. Arjun Deshpande, decided to disrupt the conventional pharma industry by making generic medicines accessible to single medicine retailers. Traditionally, in India, retailers don't have access to generic drugs, forcing them to buy name-brand medicine.
These medicines are extremely expensive because large pharmaceutical companies attempt to recuperate their own marketing and research & development costs. Additionally, even generic drugs are expensive. Almost 90% of medicines in India are generic, and large pharma companies continue to make profits by branding them and selling products at high margins. Fortunately, Generic Aadhaar ensures several such drugs are available and accessible to millions of Indians without branding and make them affordable.
Generic Aadhaar sells generic drugs including those for thyroid, hypertension, and diabetes, at prices that are up to 50% less costly than name-brand medicines. Generic Aadhaar often buys directly from the manufacturer, doesn't spend a lot of money to advertise, and passes the savings on to customers. In the future, the company plans to offer cancer drugs at lower prices and eventually COVID - 19 vaccines and therapeutics once they are made generic.
Generic Aadhaar has been aggressively aggregating struggling single medical stores in the past two years. This innovation has helped them scale the businesses into rural parts of the country. The company's in-house specialists for billing, inventory procurement, and supply chain management have helped them build a vast sustainable distribution network.
Moreover, all stores follow a minimalistic design, keeping the overall cost of maintaining the business for franchises exceptionally low. Furthermore, the newly launched app has witnessed 50,000 downloads within one week of its launch. It is, at present, available in over 30 languages and for people who are using the 2G network. Not requiring fast internet ensures that people in rural parts of India are more likely to have access to Generic Aadhaar, both in-person and online.
Arjun Deshpande with former chairman of Tata Group, Ratan Tata
Arjun was inspired by his mother, who is employed in the global pharmaceutical industry. He used to travel to Vietnam, China, the USA, and Dubai during his school holidays. He then had meetings with importers, distributors, and Ministry of Health Authorities where he learned that people in these countries have access to affordable medicines. After a brief conversation with his mother about medicines sold at comparatively high prices, he learned that most generic medicines in India are promoted as branded medicines which raise their cost.
Arjun says "These are necessities. Everyone has the right to access good quality medicine at reasonable rates. Medicines do not count as luxury commodities." Generic Aadhaar wants to reach every Indian with affordable medicines. Generic Aadhaar holds a long-term vision of assisting the underprivileged for the betterment of India. The company is willing to pull out all the stops to ensure no one is denied generic medicines. For a country with a population of 1.3 billion and unorganized pharma MSMEs, this allows for an incredibly vast potential consumer base
Generic Aadhaar's efforts have been very well received by the public. Generic Aadhaar's Republic Day and Independence Day vaccine drive caught the masses' attention. They gained a very positive response from senior citizens and pension holders alike.
The biggest challenge they faced was raising awareness of generic medicines and building the general population's trust in products without name-brand logos. Buyers were more inclined towards branded medicine that were quite expensive when compared to their generic counterparts. Over time Indians have started to realize the benefit that generic medicines provide.
Generic Aadhaar helps small pharmacies become profitable and stay relevant through the sale of affordable medicines they provide. According to reports, top branded medicine companies spend about $25 to $30 billion in Marketing & R&D costs.
The company delivers medicines at lower costs because Generic Aadhaar procures directly from Food and Drug Administration (FDA) approved World Health Organisation and Good Manufacturing Practice (GMP) certified manufacturers, which are then supplied to retailers. With annual revenue of sixty million rupees (~$800,000), based on our conversation with their finance and valuation team, the start-up projects revenue of Rs 1.75 billion (~$24 million) in the next three years.
Former chairman of the Tata Group, Ratan Tata, has made investments in Generic Aadhaar that helped the business to become established and grow. It has increased the company's credibility, valuation, and ability to expand. The company plans to use its investments and surplus cash for expanding into rural areas of Gujarat, Tamil Nadu, Andhra Pradesh, Delhi, Goa, and Rajasthan. Generic Aadhaar intends to partner with thousands of pharmacies on a franchise-based model.
Standalone pharmacies are offered a free face-lift with Generic Aadhaar branding, logo, and requisite IT infrastructure with links to the head office in Thane. They support single stores that are facing extensive competition from independent online pharma companies. They have initiated this journey by tying up with thirty retailers on a profit-sharing model. They provide about 40% profit for retailers and expect the margins to go up along with the volume.
The innovation provides several benefits to the environment and society as a whole. First, it makes medicines accessible to customers at a significantly lower cost, making them available to many people who could not otherwise afford these medicines. The company also exports hydroxychloroquine, a drug for which the demand has significantly increased amidst the COVID-19 pandemic. In addition, Generic Aadhaar supports several government initiatives such as the 'Make in India' & 'Atma Nirbhar Bharat' missions. They aim to generate employment for 300,000 individuals by the end of 2021.
The country's current focus on oncology products has made India a massive hub for medicine consumption and generation. According to Arjun, "The company has partnered with stores in over 130 cities in India, adding 10-15 stores almost every day. By 2023, we expect to have a partnership with 30,000 stores." With the mobile app launch, the company expects further penetration to meet underserved and unserved markets in India.
Generic Aadhaar is also working on an initiative called "Entrepreneurs under One Umbrella" which aims at assisting single store owners further grow their business and earn higher profits.
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Arjun Deshpande, Founder and CEO
Generic Aadhaar’s mission is to distribute life-saving pharmaceuticals across India at low cost. While most pharmacies in India purchase generic drugs from manufacturers, market them heavily, and sell products at high prices, Generic Aadhaar lowers costs by distributing through an online app and through franchised pharmacies. Because marketing expenses are low, Generic Aadhaar can offer lower prices, making products much more accessible to consumers who depend on these life-saving drugs. Arjun Deshpande popularly known as "Pharma Wonderkid" is working to ensure generic medicines reach India's masses at affordable prices.