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In this Open Letter:

• Doctor’s orders: Big opportunities in Pharma and Health.

• Get ready for brain implants, SA’s car rental boom & lightbulb bans.

• Big ticket: The clever way to get going in B2B SaaS.

• 50 Founder’s Tools: Download the mega list of must-haves (on us)!

TRENDING NOW

Good Health

Tech opportunities in pharma and GPs

A few weeks ago, we covered how spending on pharmaceuticals and healthcare products is down 30% year-on-year. So when Dischem released its annual results, we were curious to see how it did and to see what opportunities there are in the healthcare space.

The results

Dischem saw a 9% growth in revenue to R32 billion (btw Clicks at R42 billion) if you disregard the Covid impact. This is important because, while Covid had a negative impact on most companies, pharmacies like Dischem made lots of money out of testing and vaccines.

About R1.4 million per day, in fact, for most of 2021 and 2022 – that’s R739 million. And that dropped off to just R11 million in the 6 months from September ‘22 to February ‘23. So it’s safe to say people have lost their appetite for Covid.

Data and Fin services

Now, if you’ve been to a Dischem before, you will know that “Do you have a Dischem card?” is Dischem cashier-speak for “Hello how are you?”.

And it works. They have 7.8 million profiles through Dischem loyalty cards, which roughly translates to 1 in 9 South Africans having a Dischem card.

Selling financial services to this loyal customer base is a massive opportunity (they highlight a ±12 million employed and uninsured user base) and they have started pouncing on this with health insurance and gap cover products.

E-commerce

While you can’t deliver prescription meds via e-commerce, Dischem has grown its e-commerce business by 15.1% year on year. Although, in total it generates R400 million per year – only 4 times what an average retail store does. So it’s minuscule compared to its parent’s 250 stores.

And that’s true for most traditional retailers. E-commerce has become relevant enough that they have to offer it, yet very few are shooting the lights out. In fact, most are likely to lose money – despite increasing its revenue to R13 billion this year, Takealot still posted a R111 million trading loss margin.

What was worth noting is the reduction of delivery cost to 4.6% of revenue. A number that in itself gives insight into an outsourced delivery operation. Doing delivery for a still relatively small e-commerce operation such as Dischem nationally is an R18.4 million-a-year business. Provide a service or product (like Loop) that reduces this by a few % points and there is good money to be made.

Zoom a doctor

Perhaps the most interesting insight from the results was the growth in in-pharmacy virtual doctor consults.

Virtual consults are when a doctor (mostly a GP) gets dialled into a consultation with a patient that is at a Dischem clinic. A rapid increase to almost 8’000 virtual doctor consults per month means adoption of the technology as a solution is on the rise. And it makes sense:

• Virtual doctor consultations are cheaper due to fewer overheads on the doctor's side. With ±12 million employed and uninsured people in SA, they have to pay cash for GP consultations. If each of these sees a doctor once per annum (not unlikely), that’s 12 million consults.

• Virtual doctor consultation is more convenient. Making an appointment, driving there and waiting (doctors are always late) is not a great experience especially when you are not feeling well.

• Seeing a doctor at the point of collecting the prescription medicine means one trip to cover it all. What’s more, the pharmacy gets guaranteed footfall, which results in upsells and who knows, maybe even signing up for a Dischem Card.

But its not only in a pharmacy

South African startup, Udok, offers GP consultations online for as little as R350. And with waiting times almost non-existent, it’s the fastest way to get in touch with a qualified medical professional without breaking the bank.

The technology and the cost not only make it more affordable for those that can already afford it, but it opens up whole new markets that otherwise would not have opted for a consult. And with Africa facing a shortage of healthcare professionals, perhaps tech can play a key role in alleviating the impact of this shortage.

What’s more, in time, the introduction of AI could very well see increased efficiency and lower costs, further improving healthcare across the continent.

Have you tried a virtual GP consult? How was your experience? Hit reply and let us know…

IN SHORT

🧠 Big brain stuff. Elon’s Neuralink gets approval for human trials. Its implants aim to help people overcome blindness and paralysis by linking brains and all kinds of computer equipment.

💡 Lightbulb moment. A ban on inefficient light bulbs is on the cards in SA. More efficient lightbulbs mean up to 40% cheaper electricity bills and less demand on the national grid.

💳 Swiped. The dark web reveals nearly 47 000 SA payment cards compromised. Even more concerning is the additional personal info accompanying the card details, like home and email addresses, telephone numbers and date of birth. Yikes.

🚙 In the driving seat. Whilst almost coming to a complete halt during Covid, car rental in SA is booming off the back of increased travel demand post-Covid.

🚀 Like a rocket. Nvidia shares soar towards $1 trillion – making it more valuable than Meta and Netflix. And this is due in part to the AI boom driving chip demand and Nvidia being perfectly positioned to capitalise. Meanwhile, Intel is down 49% over the last 5 years.

­THE BUILDER’S CORNER

This week’s Builder’s Corner is brought to you by Specno.

How to Get Going with B2B SaaS

SaaS is a killer business model if you get it right – your share of a R4.9 trillion industry. And perhaps doubly so if you can go B2B; companies have the ready cash to spend on the right solution.

But B2B SaaS at scale is easier said than done – companies often want to see the product trialled in a live environment, or at least see solid case studies of its success before even considering you.

So what is the path to building this?

1. Find a problem – Corporates (B2B customers) are always looking to 1) increase revenue and 2) increase profit margin. Which they do by reducing costs in existing business (like Dischem reducing their delivery costs above, for example) or capturing market share in new areas (again, Dischem started selling medical insurance or other products to existing customer base).

Now, how do you find these opportunities?

• Check out their annual reports

• Keep up with industry trends (by reading this newsletter where they get pointed out, of course!)

2. Figure out how to help a corporate do either of those – Can you create a service and/or product that solves the problem? For example, you help Dischem get its e-commerce delivery costs down or upsell new products to existing clients. This doesn’t have to be a fully developed product, it can start with an idea, an intent and know-how. Pitch them this idea and get a pilot.

Whatever costs your service saves them, there is reason to believe that part of that saving can go towards paying for your solution. I.e. Save them R5m a year in delivery fees, you could charge R2.5 million a year for your solution (given there’s no one else that can do it for substantially cheaper).

3. Now bring the tech – Once you’ve solved the problem, introduce even more tech and replace the human effort as far as possible.

4. Multiply and go SaaS – Once it works for one, you have your case study and can sell to others using a license fee multiple times.

Got a topic you want to be covered in Builder’s Corner? Hit reply and we’ll hook you up with some serious insights…

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