Hoping to become the Amazon for the Indian healthcare sector, city-based IdeaRx Services, a group buying organization, plans to get into the hospital equipment segment, and acquire pharma distributors apart from geographical expansion, said a top company official.
The four-year-old company aggregates the various drugs and consumable requirements of hospitals, sources them from manufacturers, and supplies to about 50 hospitals at lesser rates.
“We have the data about the various equipment needs of hospitals. We intend to have our own private label for such items and get them to contract manufacturing, a Saravanan Vivekanandan, Co-Founder, IdeaRx, told IANS.
He said the company’s plan is to invest about Rs.15 crore in its expansion.
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Following the food or mobility aggregator model, IdeaRx gathers hospitals’ drug and consumable needs and sources them directly from manufacturers and supplies to hospitals.
“Small hospitals will not get the volume discount. As an aggregator we are able to get better discount rates from the manufacturers and pass it on to the hospitals,” Vivekanandan said.
Inventory costs for a hospital will be high, and managing that is important.
“At an average a 100 bed hospital with about 10 speciality divisions will have to hold about 5,000 shop keeping units (SKU),” Vivekanandan said.
Simply put, SKUs are items held for sale in a shop or in other organizations.
A standalone hospital will not be able to command volume discounts as enjoyed by hospital chains which paved the way for players like IdeaRx.
Further, during the Covid-19 pandemic, many small hospitals did not know what to stock.
“With our algorithm we can predict the likely demand for various items and accordingly place the orders. For example, each Covid-19 patient needs about 50 items. Thirteen of our client hospitals admitted Covid-19 patients and none of them ran out of stock,” Vivekanandan said.
While multi-specialty hospitals can get volume discounts, what about standalone specialty hospitals like eyecare?
Responding to that he said, with our software and from the inputs from the hospital, the demand could be projected. Based on that, orders will be placed with the manufacturers and secure volume discounts.
A combination of expertise technology, supply chain and healthcare act as an entry barrier for this segment.