Why we invested in Myra - a potent synthesis of technology and operations
I’ll start with a short anecdote. A few months ago, a woman placed an order on the Myra app for Burnol, Ibuprofen, an antibiotic lotion and cotton gauze. For the folks at Myra, this was a fairly routine order…until the delivery boy reached her house 30 minutes later. He was shocked to see the woman, a single mother, with first degree burns on one hand, holding an infant child. He helped her take care of the burn wound, his mind reeling with what he saw. On his way to her house, he had noticed a chemist store across the street. Why didn’t she just order from her neighbourhood chemist, he wondered? The answer, as many of us in India experience daily, is a lack of reliability. The chemist may promise to send your medicines right away, but both he and you know it could be anywhere from an hour to several hours before they actually show up. Couldn’t she walk to the chemist and buy the medicines herself, he thought? But as any mother of an infant would tell you, that’s easier said than done. Also the chemist may not have all the medicines you need. So you may have to visit multiple chemists, making it unreliable and inconvenient. With Myra, she knew, that no matter what, the medicines she needed would all be at her doorstep within the hour. Trust. Reliability. Convenience.
While the story above describes an emergency to drive home a point, the tens of thousands of customers who trust Myra rely on it for their everyday medicine needs.
The Indian Pharma industry and problems in medicine ordering
Medicine retail in India is a $15B+ industry growing at 15% pa. The key problems in buying medicines are:
- High prices: Inefficient, fragmented supply chain with multiple intermediaries and significant margin leakage resulting in high prices.
- Poor availability: Most chemists operate at 55–65% order fill rates i.e. of every 100 orders they receive, they are able to fulfil in *entirety* about 55–65% of orders. They hold ~5000 SKUs of the total 100,000+ SKUs available and don’t use any technology for inventory management. This results in delays, multiple trips to chemists and so on.
Chemists, on the other hand, face various issues like low inventory turns, duplicate/fake medicines, pilferage/expiry of medicines due to large number of SKUs, high real estate costs and limited scalability. All of these problems can be solved to a large extent using technology.
The Myra solution: the magic of Technology and Operations
At Matrix, one of the fundamental views we have, is that businesses that are built at the intersection of technology and operations give you more leverage than if you were doing just operations or just engineering work. The marriage between these two disciplines has created a whole new set of opportunities. Look at what Amazon and Uber have done globally — are these more operations or more technology companies? Closer home, take the example of Ola, Flipkart or Swiggy. What these companies have done is nothing short of amazing by using deep technology to marry the online world with the offline world. They’ve helped bring order to chaos. These businesses are incredibly hard to build but when done right, they create strong moats.
- The team at Myra is easily among the best data science teams I’ve seen in India. Since the beginning, they have taken head-on the challenge of solving the core issue of fill-rates that plagues this industry. Myra predicts which medicines to stock, in what quantities, on what days of the week, and this is specific to each locality. This is because medicine buying patterns differ from locality to locality, even within a city depending on what medicines doctors in that locality tend to prescribe. Over a period of time Myra’s algorithm has allowed them to operate at 90%+ order fill-rates (v/s 55–65% for local chemists). For the few medicines that they don’t have in stock they source it from local distributors, and their algorithm makes note of this to self-learn and incrementally improve fill-rates even more over time. As a result, a customer always gets 100% of the medicines she ordered.
- Myra runs a full-stack model - it holds medicines in stock and is responsible for delivery. This gives Myra multiple advantages; better control on operations, superior margins and supply credit. The superior margins are a result of removing intermediaries.
- Because of its backend tech, Myra’s delivery efficiency and per order delivery costs rival the best in India. The customer gets a fantastic experience since there is more operational control on each delivery. I believe that the marketplace model employed by other companies in this space wont work. They serve as online lead generation companies and leave it to local chemist(s) to fulfil the order, sometimes providing logistics services. They aren’t solving the key issue of fill-rates and so by definition will be as effective (or ineffective) as the individual chemists they depend on. Secondly, I don’t see how the unit margin structure in such a model will ever work. And lastly, the marketplace model leaves you more vulnerable from a regulatory standpoint . As a full-stack company, Myra complies with all licenses and procedures needed by a chemist to procure, store and dispense medicines.
Operations: Myra is one of the few companies that has successfully implemented heterogeneous warehousing…the other company that has done this successfully being Amazon. Check out this cool video to know how this works at Amazon. As a result, from the time Myra receives an order, to the time the items are verified, picked (average 6–8 items per order), packed, invoiced and ready to leave the warehouse, is under 7 minutes! Thats how Myra consistently (>95% success) manages to deliver medicines within an hour even in a perennially trafucked (pardon the french) city like Bangalore!
Acute v/s Chronic and the proof of the pudding
A bold decision Myra took early, was that it would not serve Chronic patients alone (even though they are more profitable and easier to serve). This is analogous to Ola deciding not to build an inter-city cab business first (again more profitable and less complex to serve segment). Ola believed that once it cracked the harder problem of intra-city commute, launching the inter-city segment was child’s play. The latter while easier to build, has low network effects and no real moats.
Chronic patients typically order the same set of medicines each month. Building a business for this segment doesn’t need much technology (perhaps a basic CRM?). These are akin to traditional mail order pharmacy businesses in my mind. And because these are planned purchases customers don’t mind placing their order online and waiting for few hours even a few days to get their medicines *as long as they get a good discount*. Once the discounts are pulled back, my bet is a large number of these customers will go back to buying from their local chemist, because there isn’t a 10x improvement in the buying experience and buying online has the additional friction uploading a copy of the prescription.
Acute patients on the other hand are harder to serve, but order more frequently. Think of your own household, how often do you see such situations…your daughter runs a flu, your aged father has indigestion, your husband pulls a back muscle, etc. Like you expect your Ola cab in minutes today (4 minutes is the magic number per some studies), you expect medicines to be delivered in a *reasonable* time - at the minimum bettering the experience of ordering from your local chemist. Over multiple experiments, Myra has seen the magic number to be within an hour — where customers would rather order on Myra than a local chemist. Once you can reliably serve the customers acute medicines use-case, the customer rewards you by moving a larger wallet share of her households healthcare spend (including chronic medicines requirements) to you. Don’t believe this? See the chart below showing Myra’s key metrics over the past 12 months (Y-axis scale normalized and hidden to protect confidentiality of numbers).
Myra’s growth has come almost entirely by word of mouth. With minimal and mostly flat marketing spends, revenue has grown over 700% YoY.
Secondly, Myra’s customers are sticky. ~5% of its customer base places an order every day. It will be exciting to see what LTV/CAC they can achieve as they scale.
Finally, what’s most encouraging is how customers are consistently moving more of their household spend on medicines to Myra. Their average month 12 revenue cohort is >125%.
The team and the way forward
All of this is the result of the genius of Faizan and Anirudh, the co-founders of Myra and their incredible team.
Faizan and Ani are the quintessential experiential founders, who faced many of the hassles described above, while buying medicines for their grandparents and decided there had to be a better way. What’s most striking about them is their strict first-principles approach to problem solving and living by the adage “simplicity is the ultimate sophistication.” The duo is a classic reflection of Matrix’s investment thesis “founders first”.
It’s early days for Myra, they are live only in parts of Bangalore today (download their app and give it a spin) but will soon scale to other cities. As more and more people order medicines online, the data they collect will have far reaching impact - from bringing efficiency to the pharma supply chain to medicine availability in remote areas to helping government agencies detect spurious/fake medicines to providing help during an epidemic. The possibilities are endless and we wish them luck!
PS: incase you’re wondering why the name Myra, it is the home of Santa Claus, one who delivers good things to good people on time every year without fail :)
About the Authors
Tarun Davda is a Managing Director at Matrix Partners India, an investment firm with INR 4,500 crore under management. The firm invests in companies targeting the Indian consumer and enterprise market at the seed, early and early growth stages. The firm has invested in several market leading companies in the consumer technology space including Ola (local transportation), Quikr (online classifieds), Practo (digital health platform), Dailyhunt (mobile local language platform), Mswipe (mobile POS), Treebo (digital hotel chain), Belong (recruitment + big-data platform) and Zarget (marketing automation) among others. You can follow Tarun on twitter at @tarun_davda