LEAN START-UP MANAGMENT

COURSE CODE: MGT1022

SLOT: TE2

PROJECT REVIEW - 3

Mukund Misra – 17BEM0134

Shylesh Ram – 17BCI0111
Shashwat Negi – 17BCE0322
Gowtham Reddy – 17BCE0080

Submitted To
Dr. RIJESH M
Associate Professor
School of Mechanical Engineering

1
 PHARMVILLE

Business Model Plan

2
 Table of Contents

Contents

Business Model Plan Summary ............................................................................. 5

Business Background Company ............................................................................. 5

Industry ................................................................................................................ 6

The Crucial Areas of the Business Model Market Attractiveness (Offering – Sector
1) The Target Market ............................................................................................ 6

Target Customers .................................................................................................. 6

Market Research and Analysis .............................................................................. 6

Marketing Plan and Strategy ................................................................................. 7

Marketing Plan ..................................................................................................... 7

Unique Value Proposition (UVP) Products and Services ......................................... 8

SWOT Analysis ...................................................................................................... 8

Competition .......................................................................................................... 9

Brand .................................................................................................................. 10

Revenue Generation ........................................................................................... 10

Calculation for revenue Advertisement on website ............................................. 10

Subscription: ....................................................................................................... 11

Funding............................................................................................................... 11

EXPENSES FOR OUR STARTUP ............................................................................. 11

Sales Model (Monetization – Sector 2) Sales Forecast ......................................... 13

Future Sales ........................................................................................................ 14

3
Sustainable Competitive Advantage (Sustainability – Sector 1) ........................... 14

Competitive Advantage ...................................................................................... 14

Innovation Factor (Sustainability – Sector 2) ....................................................... 14

Pitfalls and Avoidance (Sustainability - Sector 3) ................................................. 15

Operational Overview ......................................................................................... 15

Organizational Chart ........................................................................................... 16

Risk analysis ........................................................................................................ 16

Supporting Documentation ................................................................................. 17

4
Business Model Plan Summary

The business model that we shall be using is that one of a lean startup. It involves coming up with
a minimum viable product (MVP) and testing the customer response to our product. Over here,
our product is a website for purchase of medicines along with systems for medicine
recommendation, doctor authentication and delivery management. After a coming up with our
website, our plan was to test it, take opinions from medicine buyers as well as doctors. If the
response is negative, pivot is required. The Lean Startup provides a scientific approach to creating
and managing startups and get a desired product to customers' hands faster. The Lean Startup
method teaches you how to drive a startup-how to steer, when to turn, and when to persevere-and
grow a business with maximum acceleration. It is a principled approach to new product
development.

Business Background

Company

Our startup venture, is another one of these online pharmacies, with the additional innovative idea
of collaborating with doctors to sanction the purchase of medicines and to take continuous surveys
of the general public, to interpret their needs and demands. We shall also keep track of their
medical record, and alert the customers if he or she is allergic to an ingredient present in the
selected medicine.
The biggest advantage that an online pharmacy has, is the fact that required medicines are
delivered to the customer’s doorstep. Also, the customer does not have to go through the pain of
arranging logistics in case a drug is unavailable, since that part will be taken care by us.
Furthermore, the customer does not have to keep paper bills since all purchase history will be
available in the user profile. These are the advantages of a general online pharmacy. In addition, our
start-up shall have more features which we have thought about ourselves. They include:

 Approval system by doctors: Buying drugs without prescription from online pharmacies
is a major issue that persists. Drug addicts exploit this opportunity and that is a major
drawback. To overcome this issue, we plan to create a doctor’s approval system. For this,
we’ll have to collaborate with doctors. The doctor shall have a separate doctor’s login, in
which he can supervise the activity of his patients. Certain drug purchases will not be
sanctioned unless the doctor associated with the patient approves of it.
 Another one of our feature shall be drug recommendation system. A patient, on typing
their illness shall be recommended with the corresponding drug by our website. Of
course, this will have to be sanctioned by the doctor.
 A person suffering from chronic diseases will require medical supplies at regular
intervals. We will make sure that the order is delivered to them at the required intervals
without the customer having to place the order again and again.

5
Industry

An online pharmacy is a pharmacy that operate over the Internet and sends the orders to customers
through the mail or shipping companies. Online pharmacy is one of the fastest growing industry
in India & Asia.

The Crucial Areas of the Business Model Market Attractiveness (Offering – Sector 1) The
Target Market
The market we are targeting is the online pharmacy business.

As this is a startup that provides medicines online, the services provided by us will maintain a
standard at all times. Since, there is low competition in this field, this startup will make sure that
the products reach on time and are not overpriced. This makes it difficult for any new competition
to survive.

Target Customers

This startup aims at providing its services in Vellore for a start. VIT will be kept the main center
for services as students from all around the country come here. Thus this will provide us a proper
feedback and suggestions. Apart from this, the services will aim to be simple and easy for the aged
members of the society.

Our plan is to convince doctors practicing in Vellore to persuade their customers to use our
website. By this, we can ensure publicity from the best way possible.

If the feedback we get turns out to be positive, we shall extend this business to main metro-cities
like Delhi, Mumbai, Chennai etc.

Market Research and Analysis

Online pharmacy business is expected to become 128 billion dollar industry by 2023 which means
there will be huge rise in this industry in the coming years.

India has around 3 million plus active app users, as online pharmacy is having a exponential
growth our company is expecting 15000 downloads in the first 6 months after the launch of our
app

To increase the sales of our products from our websites and app we will we advertising our
company via social media and at the initial period we will be hiring social media celebrities to

6
advertise our website. Newspapers and magazines will be used to advertise our products and
increase awareness about the online pharmacy.

We are planning to hire some agents to advertise our company in the rural areas as well as in
small towns.

To increase our business first we have to kill the competition first, to do so we will be offering
our customers a reasonable discount at initial period and decrease it as the regularity of the
customer increases.To keep our customers attached to us we will be providing offers and
discount coupons to our regular customers.

We have used a questionnaire to conduct a small scale survey to analyze the market. The data that
we have inquired from the survey has helped us a lot in in understanding the needs of the consumer
and what the market needs. The questionnaire has been attached at the end of the Report.

Marketing Plan and Strategy

We aim to convince doctors practicing in Vellore to persuade their customers to use our website
and order products from there. In this way, we can target our products to the consumer and hence
will also increase the publicity of our startup.

Customers who use the website frequently will be given discounts and offers on regular basis or
on transactions above a certain limit. Deliveries will be made on the time as well. By this way, we
aim to maintain a good relationship with the customers and make sure that customers do keep
coming back for to use this website.

Since our target group mainly focuses on VITians, we plan to sponsor a few clubs for their events.
By this we plan to publicize this startup in VIT as well.

Marketing Plan

We expect to persuade doctors who specialize in Vellore to induce their clients to utilize our site
and request items from that point. Along these lines, we can focus on our items to the buyer and
thus will likewise expand the attention of our startup. Clients who utilize the site as often as
possible will be given rebates and offers on ordinary premise or on exchanges over a specific point
of confinement.

This idea has a huge potential to grow as there are not many competitors. If we find success in this
region, we plan to expand to metro-political cities like Delhi, Chennai, Hyderabad etc.

7
 Unique Value Proposition (UVP)

Products and Services

Our uniqueness lies in our doctor authentication system. It is a social cause that would in-fact
create drug abuse. Also our drug recommendation system adds new value to our website.

The common mistakes made by pharmacies is provide products that very close to expiry and that/or
have already been opened and used. We shall take care to not commit such errors and to always
maintain the standard and quality of our service.

Providing a service that delivers right at the customers doorsteps within a period of time is what
gives this startup the edge to succeed in the current market.

SWOT Analysis

 STRENGTH
 Doctor authentication system
 Would help in preventing misuse of drugs
 Services like online consultation of doctor available
 Details regarding the product are available on line so no need to walk or use petrol to go to
doctors.

 WEAKNESS
 Difficulty in getting licence for our pharmacy
 Difficulty in getting doctors to work with us
 Lack of patent protection
 New in this industry segment

 OPPORTUNITIES
 Chance to satisfy unfulfilled customer needs
 Chance to get funding from NGOs
 Growing market demand
 Government subsidies

 THREATS
 Threats from the already made reputations of other online pharmacies
 Threats in changes of laws and regulations
 Technological changes that can make our product obsolete
 Lacking awareness in rural area

8
Competition

From the research conducted, there are not many competitors in this field. So hence the potential
here can be exploited by us and by providing the services that we intend to, will make it difficult
for new competition to rise as well.

We have performed a literature survey on existing online pharmacies. We found the following
online pharmacies:

 Apollo pharmacies: a part of Apollo Hospitals – Asia’s largest healthcare group. It

is India’s first and largest branded pharmacy network. It claims to have features
of providing prescription refilling service on request, 24 hour helpline and computerized
service and free home delivery.
 Medplus: This pharmacy claims to offer access to its customers for its services via online,
mobile, voice and physical retail fronts through a combination of its stores and the
ePharmacy store. It also offers home based clinical lab services through a portal and
prescription and non-prescription glasses and other optical products through its optical
business subsidiary.
 1Mg: Has features of booking appointments with doctors online, performs diagnostic
tests, also provides Ayurveda and homeopathy.
None of these companies have the doctor approval system and drug recommendation system
that we propose.

9
Our Competitors:

Brand

From the needs of the current market, this startup will taste success only if we provide the best of
quality in our services and products. Providing our services at cheap costs while controlling the
quality is what will pull the customers and consumers towards us.

Revenue Generation

Advertisement on Website:

The goal is to gather a sizable user base and accumulate user data. This collected data is then
sorted for relevant information and sold to advertisement publishers, who in turn pay to place
targeted ads on the website.

Subscription:

We offer the basic services of buying the medicines free of cost on the website, but for further
premium services such as same day delivery of meds, doctor consultation etc. users will have to
subscribe to the website at a marginal cost.

Sponsorship:

In this model, advertisers provide users with rewards once they cross a pre-set threshold on the
website. Revenue can be generated by keeping a share of redeemed awards. Tie-ups with doctors
and hospitals will get us additional support

Calculation for revenue

Advertisement on website

We would be targeting to have 10,000 daily active users for our website. It is pretty good number to
make decent revenue out of your website. We assume every user spends approximately 2 minutes
on your website per day and you are using banner ads in your website. Most of the advertising
networks follow Cost per Click (CPC) model for their ads. So whenever users click

10
on the ads in the website, few pennies will be added to our pocket. Optimal Click through ratio
(CTR) for websites is around 1.5 - 2 %. The average revenue per click (RPM) is around Rs. 2 for
banner ads. It differs based on type of adsBanner ads will be having 30 seconds refresh rate,
meaning that every 30 seconds new ads will be fetched and shown.

Subscription:

We would be targeting to have around 5000 subscribers in the first year of the implementation of
our idea and the cost for subscription would be around 150-200 Rupees. This overall will give us
revenue of 8-10 lacs/ annum.

Funding:

There are many types funding like bootstrapping, crowd funding, angle investors, venturecapital,
etc. Now, when would you require funding and what type of funding is required depends largely
on the nature and type of the business. For our startup we would go for the following type of
funding:

EXPENSES FOR OUR STARTUP:

There's more to a business than furnishings and office space. Especially in the early stages, startup
costs require careful planning and meticulous accounting. Many new businesses neglect this
process, relying instead on a flood of customers to keep the operation afloat, usually with abysmal
results. Startup costs are the expenses incurred during the process of creating a new business. The
areas we would be investing money for our startup are:

1. Advertising cost: Obviously if you make a product you have to advertise it so that your
customers know about your product and show there interest in it. Advertising has to be done very
efficiently because the whole business relies on it. It would be done on every social media
platforms, websites, blogs etc.

2. Employee expenses: Businesses planning to hire employees must plan for wages, salaries and
benefits, also known as cost of labor. Failure to compensate employees adequately can end in
low morale, mutiny and bad publicity, all of which can be disastrous to a company.

3. Equipment and supplies: Basic supplies are necessary for any office like water, internet, etc.
Equipments are also required to get work done. For our startup we would require PC’s, printers,
different software etc. These have to be included in expenditure statement.

4. Insurance and permit fees: Every company requires insurance and before starting abusiness,
necessary permissions are taken and registration needs to be done.

11
5. Research expenses: Before starting a business a research about the market is done which is very
necessary. Also after starting the business research and development team needs to work for
continuous improvement of the business and be ahead of the competitors.

6. Technological expenses: These include the cost of hosting of the website and the cost of
hosting the app on iOS. On android hosting is free of cost. These are low because the cost of
hosting a website is Rs.1.5$-2$/month and hosting an application on iOS is 100$-200$.

7. Office and warehouse rents: We need an office space for the employees, customer care and
few warehouses for storing medicines that can be delivered to customers directly from
warehouse.

8. Expenses for payment gateways: We have to Transaction costs(Credit /Debit Cards)

pay to the payment gateway service providers for
using their payment gateway in our app but it is
very minimal. One Time Setup Fee

Rs. 7,500 - Rs. 40,000 3% - 7%

SALES

INCOME AND EXPENDITURE STATEMENT: Income:

Revenue type Amount (one year)

In app advertisements ₹15,00,000

Subscription ₹8,00,000

From selling medicines ₹26,00,000

Sponsorship ₹5,00,000

Total ₹54,00,000

Expenditure:

Areas to invest Amount to be invested (one year)

Advertising and promotion ₹8,00,000

Employee expenses ₹10,00,000

Equipment and supplies ₹5,00,000

Insurance and permit fees ₹1,00,000

12
Research expenses ₹50,000

Technological expenses ₹10,000

Office rents ₹6,00,000

Payment gateway services ₹40,000

Offers for the customers ₹1,00,000

Buying medicine stocks ₹10,00,000

Total ₹42,00,000

Net Profit/loss
₹12,00,000

Sales Model (Monetization – Sector 2) Sales Forecast

Pricing Strategy

Our pricing strategy is High-Low Pricing strategy. In this type of pricing, we will buy the
pharmaceuticals at higher rate but initially, we sell the basic medicines at a lower rate to the
customers

They are lower compared to the price of the competition. Because, in order to increase the number
of customers and also to regain the profit from that, we have to pique the customer’s interest. The
main driving forces for the sales forecast are the estimation of the increase in customers per annual
year and the suitable decrease in the ingredients of the medicines as per the increase in sales men
that works for the pharmacy.

Future Sales

The future sales cannot be determined for sure but it can be actually predicted. But the accuracy
depends upon how close the pricing goes along with our strategy. We may not be that talented but
our sales manager is talented enough to designate which roles we have to partake and how do we
asset our marketing in the future.

13
Sustainable Competitive Advantage (Sustainability – Sector 1)

The particular pricing strategy right now we are using is High – Low pricing strategy. We are using
this strategy because we lack customers basically and in order to increase the profits and number
of customers to be increased, the prices should be low and intact and also they need to be effective
enough to get a good name.

Competitive Advantage

The basic competitive advantage for us is broad way efficiency of our start up and that is the
broad effects and choices that the customers can take and they can effectively use based on the
recommendations of their consultants. In location wise, we can say that we are all over the
world.

To retain successful and talented workforce, we keep on pivoting so that the intent of customers
decreasing is too low and also we never ever intend to decrease the quality of drugs we supply so
that the trust on our pharmacy will remain intact.

Innovation Factor (Sustainability – Sector 2)

Activities that increases one’s view on the limited supply by online will be highly welcomed.

The financial resources will not be allocated at the beginning but under the circumstances of
increasing the business, the profit itself will be allocated as a financial resource.

We will be in dire need of innovation since this is a start-up which mainly depends upon the
pivoting. The innovation factor of our business is highly recommended rather than that of
competitors because our start up itself is an innovation that has high expectations in
improvement and has large space for growth.

We will be protecting our innovations by marking them as ours before they are marketed. For our
better growth, we already had met with agreements with so many private doctors and hospitals
and also has huge connections with many pharmaceutical companies because they too are
interested in investing in our start up.

14
Pitfalls and Avoidance (Sustainability - Sector 3)

The following are the possible drawbacks to our business.

a) Database of many doctors is required – We also need to authenticate the doctors to check for
frauds

b) Getting permission to access medical history of patients is difficult

c) Legal permissions for recommending medicines is difficult.

d) There is no guarantee that doctors will cooperate

e) Logistic problems associated with 24 x 7 delivery

The Pitfalls of our start up is known. It doesn’t have any location handicap. If there is a change
in regulations or policies like treatment for general health check up and change in operating
patients, there will be many changes in our start up since it is basically depending on them as
basics of our website. The financial part of our start up is rather typical which mainly depends
upon the work of us or of our start up.

Operational Overview

 Location: There is no need of setting up a base since this start up is mainly based up on
connections. However, to supply every corner in our nation, they have to be divided in to
subsidiaries and all the connections has to control each and every corner.

 Physical Space and Equipment: This is absolutely not needed for our system since if
there are very few pharmaceutical industries, we can supply the quantity in a specific
time.

 Production Process: In order to supply the quantity, it has to be estimated before hand so
that it can be calculated and manufactured. But there can be some uncertainities which
may effect the supply process, so some extra medicines will be made before hand in case
of emergencies.

 Labour: Other than management, the labor force necessary can be borrowed or can be
made agreement with required delivery agencies so that there can be no need of more
men and the medicines will be easily delivered as possible.

15
Organizational Chart

Risk analysis:

16
 Supporting Documentation
Survey Questions and Conclusions.
1) What do you know about online pharmacy?

ANS. We think that online pharmacy is well known to everybody, but that is not the case, still
there are ample numbers of people who have no idea that medicines can be bought from online.
Generally, people who are well aware of internet can easily say that Online Pharmacy is something
related to medicines that can be delivered from online stores like Flipkart and Amazon. For the
middle age and the old age people, they have no idea about the Online Pharmacy.

Conclusion: If we want online pharmacy to be flourished then we have to trigger the teenage
people and people who have access to internet and give them offers that are useful to them.

2) Do you prefer going out to buy medicines or want it to be home delivered?

ANS. They say that it is good to home delivered if it is not an emergency or they can wait, but if
its emergency than the will go for local medical store.

Conclusion: If we want it to be rectified then the delivery of online medicines should be

improved and faster.

3) How do you fell when sometimes the medicine you what to buy is not available at local
medical stores?

ANS. They say that if any medicines is not available at local medical store then they will surly
go for online medical store.

Conclusion: From above statement it can be understandable that to attract customers we should
have all type of medicines available in the stores.

4) If the medicines are available at discount price would you still want to buy medicines from
medical store at higher price?

ANS. The short and obvious answer to the above question is that why would someone buy
medicines at higher price.

17
Conclusion: To make business competitive and attractive we have to sell medicines at cheaper
price compare to medical store.

5) What are the things that will stop you from buying medicine from online pharmacy, if any?

Ans. People are afraid of duplicate medicines from online medical store. They may take long
time to deliver the medicines. People want their medicines to be easily exchanged back.

Conclusion: People are more convenient in buying medicines from local store if above problems
will still exist in our Start-up pharmacy.

6) How likely do you recommend Online Pharmacy to others ?

“I would surely like to recommend Online Pharmacy to others as it will surely helps us”.

All the majors and the old-age people are highly recommending the online pharmacy to the others.
Since, it will be able to help others if it really increases its potent, everyone is looking for the new
way to be treated. If it even can decrease the cost of medicines, everyone would want the market
of online pharmacy to be increased and also to help in the expansion of it.

7) What more do you expect from the Online Pharmacy ?

“If Online Pharmacy really wants to help us, we want them to sell us the medicines that helps us
in getting better than selling any fake medicines.”

“ The cost of medicines are getting higher and higher. It will be good if online pharmacy reduces
the costs of medicines.”

People of the age above 40 wants it to sell genuine medicines and also wants it to increase their
medicine categories ( such as diabetes medicines, high blood pressure medicines and also
medicines that are helpful for two or more types of health issues ) . People of the age 30-40 wants
the cost of medicines to be decreased and also wants the online pharmacy to put some offers and
vouchers.

8) Would you recommend Online Pharmacy over local doctors ? And if yes why ?

“ I would recommend Online Pharmacy, since it has best doctors from all over the world“

18
“ I would recommend my local doctor, since I can trust him in getting good medicines rather
than an unknown website.”

Most of the people are recommending the online pharmacy since it can reproduce the best medicines
and also referred by the best doctors. But some of thepeople still trust their own local doctors since
they have been treated well until then by their local doctors. But if they start using Online Pharmacy,
they would surely like to recommend it afterwards.

9) Why do you prefer Online Pharmacy ?

“ I prefer it because it can surely guarantee us the best medicines with low cost. “

“ I prefer it because, we don’t need to travel a long distance for a long time just to get checked up
for a few minutes “

People prefer it mainly because it surely decreases their expenditure of money on their health
and also get the better results due to it.

10) How can Online Pharmacy improve ?

“ It can improve by giving more offers and vouchers.”

19