Setting Sail season 2, Ep. 1 | What demonetisation did to e-payments, COVID-19 will do to e-healthcare: Medlife CEO

Priyanka Sahay: All right. So Ananth, let's begin by asking you what Medlife is treating you as? It has barely been a year since you joined Medlife. You are a co-founder in the company, you have also invested in the company. And in this last one year, we have seen so many things that have happened. COVID of course has disrupted the way a lot of companies did business. But, there are still no clear guidelines for online delivery of medicines in India. Do you see this more as an opportunity than a challenge? And how do you look at the market at this point in time?

Ananth Narayanan: Great questions, Priyanka. So let me start off by why I decided to do healthcare and Medlife in particular. I think healthcare is a $100 billion-plus market in India. There is very little consumer or technology focus. After having done Myntra, Jabong for almost four years, it felt like the right next one to actually get into.

The reason I decided to partner up at Medlife is my Co-Founder, Prashant is a deep pharma and healthcare person. And I bring consumer and tech expertise. And we believe that we could actually do this interestingly together.

You referred to us as an e-pharmacy, I would like to think of ourselves as an e-health player, not an e-pharmacy player. And there is a distinction, because we are basically focused on providing a lot of the healthcare needs for consumers, whether it is medicine delivery, diagnostic, consultations, potentially at a later point insurance and other services. So we think of ourselves as an e-health player.

The market roughly just for pharmacy is $25 plus billion. And I think overall it gets to about $40 billion by 2024 across pharmacy, diagnostic and consultation. Online penetration today is in the sub 2% range, right? So I think over the next five years, there's a massive growth opportunity ahead of us. And this, by the way, was even before corona. Because India by almost all metrics, healthcare as a percentage of GDP, number of pharmacies per thousands of people, number of doctors per thousands of people is way under any benchmark that you have globally. The only way to create access, and affordability is through technology, which is what we were after.

Now, what's interesting is, I think corona has actually created an acceleration of the digital journey. What I thought would take us four years will likely now take us two years because consumer behaviour is changing fundamentally in terms of how this is happening. And the consumer behaviour is I want to try and buy the product online and I want help to come home to me, and I think that is changing.

You refer to regulations. And I'll cover that sort of very briefly. All of the large players like us there is no question of legality. There was a High Court ruling all of us have licenses, all our transactions are digitally recorded every one of our fulfilment -- every one of our fulfilment centres actually has a licensed pharmacist, acts as a marketplace that delivers the medicine. So there is no question of that.

We are hoping that actually the regulations and the draft guidelines that many of us have been involved in as a digital healthcare association will come to fruition pretty quickly. We are very excited, by the way the telemedicine guidelines have already come out during the time of corona. And there is widespread recognition that technology-led health plays are the ways to create access and affordability. I hope that answers your question.

Priyanka Sahay: It very much does. And also if you could touch a little bit upon how COVID has impacted the business?

Ananth Narayanan: So look, on the impact for us. E-health is one of the few sectors that has tailwinds because of corona, right. The reason is we're an essential service. We deliver medicines, diagnostic tests and consultations. Our business has seen a 1.5 to 2x increase in demand once corona actually happened. We have worked very hard working with the government, working with many state governments actually to make sure that our deliveries continue. And I have to say that I think about in the first few days where we had a set of issues, in getting passes and all that, I am very pleased with the level of cooperation on the ground that's happening with either the police or the state governments to ensure delivery of essential services.

So our deliveries are also now almost back up to normal. We're doing about 70% of the revenue that we used to do earlier. And I think we will quickly get back up to 100% in the next two months. But I think that the more interesting thing for me is that consumer behaviour around health is fundamentally shifting. People say, it takes 21 days to create a habit. What's been fascinating for me is the number of new customers that have come and tried out Medlife. And I think that's fantastic to see because people who are of a different age different cohort who normally would not try online are now actually giving this a try because convenience, and actually having health come home is the primary factor and not subsidies, for actually trying out our service, which I think is fantastic. And I think that behaviour change is here to stay right?

If you look at China, for example, which is let's say, three, six months ahead of us in terms of the corona crisis or the COVID crisis. Their consumer behaviours have fundamentally shifted in our state that way. E-commerce is up fundamentally, medicine deliveries up fundamentally, online health coming home is up fundamentally. So I believe that this consumer change is here to stay. And what's exciting for us is how do you look at this as an overall healthcare start-up, as opposed to just medicine delivery? So how do I combine intelligently consultation, with diagnostic, with delivery?

My consultation numbers are up 6x from the time COVID has started. And we're starting to do some interesting cross sell, and how do we serve customers seamlessly across all our three service lines? So I think it's very positive in the sense that I think now finally, tech-led health, it's a little bit like demonetization did to digital payments? I think COVID will do to e-health. And I think all of the growth is really ahead of us over the next five years.

Priyanka Sahay: Having said that, would you agree if I were to say that crisis situations always give fillip to larger companies? And this is a time when majority of unicorns so as to say are found. Case in, an example could be Zomato, for that matter, Uber. All these companies were actually found either during the 2008 of a crisis or even during the internet bust. So, would you agree if I were to say that? And during this moment, which sector do you think will give rise to the next unicorn in India?

Ananth Narayanan: So, my belief is healthcare is clearly one of them. The reason is very simple. I think we have had a 7 trillion 8 trillion dollar advertisement on health and wellness. All of us have never been more conscious of our health than ever before. And I think with the norms of social distancing, all of that, I think there is a huge opportunity in my mind, actually to do, I think, create a unicorn in healthcare. By the way, I think education is another space. Of course, we already have the unicorns there with Byju's and so on. But I think there's opportunity for many, many other startups to actually get to a unicorn stage quickly in terms of education. So healthcare and education are two clear spaces.

By the way, my belief is mobility will also start to see a massive bounce back. While asset buying in automotive may come down, given the overall economic difficulties we're in. People still need to move around. And I think with the social distancing norms, mobility could be another large area that actually starts to see growth. So I think, look, every crisis in my mind is an opportunity that should not be wasted.

These are clearly very difficult times for us as well. I think, look, all of us are in the middle of fundraise. We're all not currently profitable businesses. So it's very hard.

But I would say, my big belief is if you can use the crisis well. I think it's an opportunity and like you rightly pointed out, previous crisis have yielded big unicorns, healthcare, education, mobility, I think are at least three spaces that I think will grow massively after this.

Priyanka Sahay: Absolutely. And by when and how should the market correct itself? And you've also invested across multiple startups in your individual capacity. What is your suggestion for investors who are looking at the India market at this point in time?

Ananth Narayanan: Yeah. So, my sense is I think predicting the timing of recovery is something that is very hard to do. And I don't know whether it's going to take six months, 12 months, 18 months for the recovery to happen. It is going to be in some form, whether it's a U, whether it is an extended U all of that is hard to predict. However, I will tell you a few things. One, I am fundamentally of the belief that the next five to 10 years, Indian startups, given the demographics, given the spend, given all of the rest of the internet penetration, I think is very rosy and positive. We are one of the few markets that are growing well. I think the Jio deal by the way is a boost, right, in terms of global markets valuing Indians and Indian startups.

So I would say, I'm positive, I'm cautiously positive. I think if I was an investor, this is a great time to invest. Because you find deals, you have the ability to actually invest at a great valuation. And therefore by the way, if you take a five year view or a 10 year view, you will come out much stronger. Now that said I think most global investors and Indian investors are quite cautious and rightfully so. So I think we'll have to wait for the noise to settle down over the next three, six months before we can predict exactly how much the bounce back is going to be, but I'm confident that there will be a bounce back.

Priyanka Sahay: So the next three to six months will be very crucial for the startup ecosystem. And having said that, what would be a suggestion to the startups on how to weather the storm?

Ananth Narayanan : So I think this is a very, very difficult time. So the first advice I would have is conserve cash. Make sure you have a 12-month runway. And I think that's critical to survive a crisis like this. That's probably number one.

Number two is depending on the sector that you're in, you might have to pivot. I think if you're in essential services, great. But if you are, for example, in a service that is in luxury goods, you are going to you're unsure about your demand. So you will have to think about pivoting your business model to take advantage of the current context depending on which stage you are in.

Third advice I would have for people is, I think this is probably the best time to sort of think about talent and people. I know there are many startups letting go of people. But as you think about shoring up your team, this may also be a great opportunity to find the one or two or three rock stars that you always wanted to, because there is availability of talent in plenty.

So the first advice is save cash, create a 12 month runway. Second, feel free to pivot on the business, especially if you know that the demand is not going to come back in 6 to 12 months or is uncertain. And third, look for the best talent and people because this is a great opportunity to look for the few that you want to add to your team.

Priyanka Sahay: Right and for how long do you think social distancing will be required in a country like India, especially even after the lockdown is lifted? And alongside how do you think that the technology firm, the tech firm, the startups that you talk about can help contain the spread of the virus?

Ananth Narayanan: Yeah, so I'll cover that as two separate questions. So first is look, till you basically are able to find a vaccine, right? Corona is not going to go away, COVID-19 is not going to go away. So in my mind, social distancing norms need to become more of a habit than anything else. So I, for example, fundamentally think how we work with change. Over the last sort of eight weeks, I would say. We have basically worked almost completely from home except for our distribution centres, right in our call centre. And it's actually been quite effective.

So a lot of us will ask the question, why do we need to go back to the way we were working before? Because it is more productive, it is actually. So some part of the population will continue to always work from home. I think social distancing will remain a norm till we find the vaccine. So it could be for the next 12 to 18 months. Forget the lockdown, right?

So I think this is here for us to stay because the behaviour has changed. In a very crowded, difficult country like India where social distancing, unlike the West is very hard. I think the only real way to get through also is, by the way at some level for some percentage of the population to get corona and to sort of go through it. Because at least for the younger people, the risk levels and the fatality levels are much lower.

So this is a difficult question to answer. But I would say social distancing is here to stay, at least for in my mind 12 to 18 months, till you find the vaccine.

The second part of the question is technology. I think technology is the only real sort of solution to many of these problems. So if you think about the Bharat Health Stack that has been thought through right by many, many people, where all of us are part of that group. If you think about the Aarogya Setu app itself. I think there are many things that I think technology can do, everything from contact tracing to actually data

analytics for prediction, based on consumption of medicines to consumption of tests to whatever else. I think there are many things and I think continuing to use e-health, which is what I do anyway as a way to continue to deliver essential services and yet maintain social distancing. I think all of these will only help. And I think by the way, more and more products and services will come to your home, as opposed to you going out, right. I can't imagine, by the way, being a large events company in this space for the next 12 months. I think all of the events will go virtual.

So I think some fundamental shifts will happen. And technology -- I mean just look at what we're doing now. I think Skype calls and Zoom calls have become the norm of how we conduct business. If you asked us 10 weeks ago, whether this was how we would work. You would never think that. We do complete product working sessions using Zoom. So I think there's also, by the way, great opportunity in collaboration and virtual collaboration tools as well from a technology standpoint that could actually really help improve productivity over the next 12 to 18 months.

So I mean just to summarize, one social norm will continue, I think social distancing will continue till we find a vaccine, hopefully soon, but I would expect it to be 12 months, minimum.

Second, I think without technology you can't solve the problem. I think many parts of it, everything from allowing social distancing, while getting products into you, into your home, all the way to using technology to detect patterns and analytics to detect patterns and sort of find hotspots before they happen. All can be helped through technology.

Priyanka Sahay: Alright. So technology is definitely going to play a big, big role in taking care of this entire situation and of course, containing the spread of the virus per se. So on that note, Ananth I would like to thank you for being there with us today.

Ananth Narayanan:  Thanks so much.

Priyanka Sahay: So that's all that we have for this episode of Setting Sail. Meanwhile, if you have any comments or queries, you can write down to us. Our email is mcpodcast@nw18.com. You can also follow us on Twitter with our user ids @moneycontrolcom and @priyankasahay. Till then for more news, views and updates stay logged on to Moneycontrol.com.