Generico, a pharmacy retail chain which sells low-cost generic medicines, has raised $14 million (around Rs 100 crore) in a new funding round led by venture capital firm Lightbox.
The investment is part of the company's Series A funding round, co-founders Siddharth Gadia and Girish Agarwal told VCCircle.
The transaction is the first healthcare deal by Lightbox, which marked the final close of its third fund earlier this week.
The VC firm alone brought in $11 million. The remaining amount was pooled in by existing investors Whiteboard Capital, an early-stage fund launched by FreeCharge co-founders; and Tomorrow Capital, an early-stage strategic investment.
Whiteboard and Tomorrow Capital had invested $1.5 million in Generico’s pre-Series A round that was closed in March last year. Generico, operated by Workcell Solutions Pvt. Ltd, had previously raised Rs 1 crore in seed funding.
Generico, which began as a single store in a Mumbai suburb, will use the fresh capital to expand its store count from 40 at present to 150 in the next 18 months, said Gadia. The company plans to go deeper into Mumbai as part of the expansion plan before making an entry into Pune, he said.
Agarwal added that part of the capital raised will also be used to upgrade its technology and boost its supply chain. The company is also working on building a disease management solution platform to help patients suffering from chronic illnesses, he said.
The co-founders, both graduates of the Indian Institute of Technology-Bombay, had started by launching a drug discovery and availability platform Reap. However, as they learnt about generics medicines they realised that the cost benefits were not being passed to the end consumers. That is when they decided to go offline and pivot the business model to focus on consumers.
“We ensured that our cost of medicines are significantly low and that's where our technology and data intervention helped us to optimise our business drastically,” said Agarwal.
The company, which had only six stores till March last year, claims it is doing nearly 200,000 transactions a month and has recorded gross sales of more than Rs 100 crore since its inception in May 2017.
Generico initially started operating on a company-owned, company-operated model. But it moved to a master franchise model in which Generico owns the brand and technology while the franchise owns the real estate and the front-end operations. It does not stock any fast-moving consumer goods, unlike most other pharmacies.
"Chronic patients have no source of reliable information or network to rely on to help them manage their diseases. Doctors are short on time and pharmacies operate like dispensaries, doling out pills alongside shampoo and mosquito patches. This is where Generico steps in," said Sandeep Murthy, founding partner, Lightbox. "By building community, content and services that go well beyond the simple dispensation of pills Generico is offering an alternative way of approaching healthcare.”
The online pharmacy segment has been gaining traction of late following significant venture capital and private equity investments in a clutch of companies such as NetMeds, 1mg, Pharmeasy and LifCare despite regulatory uncertainty.
Lightbox marked the final close of its third fund earlier this week at $209.35 million (Rs 1,494 crore), surpassing its initial target of around $150 million.
The third fund made its debut investment in female wellness brand Nua in March.
The VC firm had a rather unconventional start. Murthy set up the firm in 2014 after taking over stakes in six portfolio companies of Sherpalo Ventures and Kleiner Perkins Caufield & Byers. While the six companies became part of Lightbox Ventures' first fund, the VC firm also raised $100 million for a second fund at the same time.
Other partners at the venture firm are Siddharth Talwar, Prashant Mehta and Jeremy Wenokur.
Lightbox backed six startups from its second fund raised in 2014 and the $54-million expansion vehicle set up two years later. Its portfolio includes online furniture rental startup Furlenco, quick-service restaurant chain and online food delivery company Faasos, online automobile marketplace Droom and online jewellery retailer Melorra.