Report for the Global South ehealth Observatory THE VIRTUOUS LINK BETWEEN PATIENTS, PHARMACIES AND PHARMACEUTICAL GROUPS.

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1 Report for the Global South ehealth Observatory MCLINICA, THE VIRTUOUS LINK BETWEEN PATIENTS, PHARMACIES AND PHARMACEUTICAL GROUPS Arnaud Auger January 2016, Manila, Philippines

Meeting with Farouk Meralli, founder of mclinica in Manila, on 14 January 2016. We spent a whole day in discussion with him and his team.

2 Meeting with Farouk Meralli, founder of mclinica in Manila, on 14 January We spent a whole day in discussion with him and his team. mclinica is a solution that connects patients, pharmacists and pharmaceutical companies to meet the needs of each individual by overcoming the technological constraints of emerging countries. How? What are the results and the health benefits? With what resources? What challenges have been encountered? What are the objectives? How would it be possible to help mclinica overcome these constraints to further improve its health benefits and increase the number of patients who can access them? Find out all about this project which is among the leaders in e-health in emerging countries. The birth of mclinica Farouk has two passions: the first, for public health issues in emerging countries; the second, for technology and its ability to overcome constraints. To satisfy his first passion, this young Canadian studied public health issues in developing countries, in Montreal and then at Harvard. Having just finished his studies, he created his first startup in North America to connect patients and doctors and help schedule appointments. The platform he created was similar the Doctolib or Practo platforms, for example, but 10 years ahead of them... Being ahead is a good thing, surely? But in business, and even if Farouk managed to sell his startup, being ahead also meant that the market was not mature enough to make him a millionaire. It nevertheless allowed a first successful entrepreneurial experience. Nevertheless, Farouk wanted to see a bigger health impact, and to work on the issues of emerging countries in order to try to offer a solution to the billions of people who cannot access healthcare. Farouk then worked for four of the largest pharmaceutical companies (Sanofi Aventis, Johnson & Johnson, Pfizer, Roche), still in their emerging markets, to better understand the issues of these powerful health actors in these areas of activity. At the same time, for nearly 10 years, he became involved in humanitarian work by co-creating Borderless World Volunteers, an association bringing together humanitarian missions in developing countries in the south. Based on these experiences, he understood the economic and social health problems that exist in the least developed countries, and the challenges facing each actor. This is how he came up with the idea of mclinica, designed to solve all these problems at once. From the patient perspective, he has identified several major social problems: - Availability of medicines (only one in three pharmacies in South Asia has all essential medicines), - Cost of medicines for people in the least developed countries (the cost of a pill to treat Type 2 diabetes in the Philippines is equivalent to that of a 1.5 kg bag of rice), - Quality of follow-up treatment (on average, for chronic diseases, patients take only 37% of the required treatment, for example 11 pills per month instead of the 30 indicated). Patients, sometimes uneducated and poorly medically monitored, may also need more support, monitoring, and information. 1

3 On the other hand, the problems facing businesses (pharmaceutical groups and pharmacies) in developing countries consisted of: - The fragmentation of the distribution chain; - The lack of an effective communication network, resulting in difficulties for pharmaceutical groups to access pharmacies and their data, particularly with regard to stock (since most pharmacies are small, independent shops). Figure 1: pharmacy and patient data access issues for pharmaceutical groups Farouk Meralli therefore came up with the idea of a technological platform, capable of connecting these large pharmaceutical groups with small independent pharmacies and patients. This would make it possible to offer cheaper medicines to patients in exchange for direct access to information from pharmacies for pharmaceutical groups. This online platform could help solve business problems by addressing medication availability issues and ensuring better supply of pharmacies by large groups. In addition, large pharmaceutical companies could directly contact patients to support them and give them educational advice. But how was this online platform to be implemented when developing countries face so many technological and practical constraints? In 2011, when Farouk launched mclinica, 70% of Filipinos, Vietnamese, or Cambodians had no internet access. Furthermore, nearly 80% of South Asian countries' populations do not have bank accounts, so they cannot pay online. To address health challenges through technology, we must first address the technological challenges in developing countries in the south. That is exactly what mclinica has done. Farouk came up with an innovative solution. He presented his project to the director of emerging markets for a large pharmaceutical group in New Jersey. At the end of the presentation, the director told him: Try it out in the Philippines, I ll be your first client! Surprised, and with no specific knowledge of this market, Farouk asked him why. The director replied, because if it works out there you will have validation for Asia, and also pre-validation for the Latin American markets. Go there, you have 60 days to create your core team and have your first pharmacy in the network! So Farouk resigned from his job and landed, with no team or technology, in the Philippines, where he would rise to the challenge he had been given. 2

How does mclinica work? When they go to the pharmacy, patients are offered - directly by their pharmacist - discounts (10 to 20%) on their medication if they agree to give their phone number.

The pharmacists, supplied with a phone connected to the internet made available to them by Farouk s startup, enter the transaction and patient s contact details on the mclinica app.

Finally, for pharmacists, this allows them to offer their customers an advantage without any cost for them, to retain their customers and to be better supplied (since their stock can now be directly

4 How does mclinica work? When they go to the pharmacy, patients are offered - directly by their pharmacist - discounts (10 to 20%) on their medication if they agree to give their phone number. Although 70% of Filipinos do not have internet access, the access rate to mobile phones is 113.8%. 1 In other words, almost everyone has a phone, and many people even have more than one! The pharmacists, supplied with a phone connected to the internet made available to them by Farouk s startup, enter the transaction and patient s contact details on the mclinica app. This allows pharmacists to be reimbursed for the discount they offer directly by the pharmaceutical group. It also allows the pharmaceutical group to see the stock situation in real time. Finally, for pharmacists, this allows them to offer their customers an advantage without any cost for them, to retain their customers and to be better supplied (since their stock can now be directly monitored). Large pharmaceutical companies have direct access to pharmacies and patients, and can also send educational information to patients, depending on their health issues (a patient taking diabetes pills can receive advice via text message on dietetics, as well as explanations about the importance of following treatment regularly and in the long-term, and reminders when the patient needs to go back to the pharmacy for more medication). This platform also allows independent pharmacists to work together to benefit from better margins on medicines vis-à-vis pharmaceutical groups. 1 "Philippines - Telecoms, Mobile, Broadband and Forecasts". BuddeComm. 12/10/2013. Retrieved 24/01/

mclinica offers an innovative solution to social problems (availability of medicines, costs,

communication, distribution), while overcoming technical challenges (internet access) and

The genius of mclinica is to offer a mobile solution without the need for a mobile app, or for

Today, mclinica has more than 3,500 pharmacies across five countries (the Philippines,

In addition, it affects nearly 60% of pharmacies in some countries such as the Philippines

5 mclinica offers an innovative solution to social problems (availability of medicines, costs, quality of treatment) and offers a solution to business problems (access to data, communication, distribution), while overcoming technical challenges (internet access) and practical problems (need to pay in cash). Everyone wins. The genius of mclinica is to offer a mobile solution without the need for a mobile app, or for patients to use the internet. Today, mclinica has more than 3,500 pharmacies across five countries (the Philippines, Indonesia, Singapore, Vietnam and Thailand) enrolled on the technology platform. In addition, it affects nearly 60% of pharmacies in some countries such as the Philippines (making it the largest pharmacy network in the country). Thus, more than 40 million patients can be reached via these partner pharmacies. Many large pharmaceutical companies are already part of the programme: Figure 2: photo taken during an appointment 4

What are the health benefits? mclinica was able to see its health benefits assessed by an independent research organisation.

In addition to increasing the number of patients following their treatment, mclinica can increase the duration of treatment, including through the monitoring and text message reminders offered.

mclinica. A patient interviewed as part of the study explains: Price reduction helps us a lot. Since the price went down, I am now able to buy medication over longer periods of time.

6 What are the health benefits? mclinica was able to see its health benefits assessed by an independent research organisation. If only 38% of patients follow the treatment prescribed to them, the effect of the economic incentive, in particular by mclinica, doubles their number: almost 80% of patients follow their treatment. In addition to increasing the number of patients following their treatment, mclinica can increase the duration of treatment, including through the monitoring and text message reminders offered. For example, if, on average, less than 25% of patients with chronic diseases continue to follow their treatment after five months, nearly 70% of them continue their treatment after five months with mclinica. A patient interviewed as part of the study explains: Price reduction helps us a lot. Since the price went down, I am now able to buy medication over longer periods of time. Otherwise, I could not afford to buy the pills for my dad. mclinica has also observed that 65% of the beneficiaries were women. As Farouk Meralli points out: There are two types of medical contacts: doctors and pharmacists. We notice that pharmacists see many more patients than doctors. Many patients do not dare to make an appointment with a doctor but will not hesitate to stop at the local shop. Helping this link in the chain impacts more people! Obviously, this health benefit allows pharmacies and large pharmaceutical companies to increase their sales. Jo Anne C. Rabacal, pharmacist, Manila owner of Health Talk Pharmacy, explains: Since joining the mclinica programme, we have more clients thanks to the recommendation made by others, word of mouth brings us a lot of business, and we can better convince patients who come to learn about the price of prescribed medication. 5

model (Software as a service). This model has the advantage of being scalable, that is to say allowing an exponential increase of revenues related to increased usage.

This viable model has attracted investors such as 500 startups, the largest accelerator in Silicon Valley and a major investor in emerging markets.

7 What is the economic model? mclinica only pays the major pharmaceutical companies for its service, receiving a commission on each sale made through the platform, in addition to charging a subscription to the platform on a SaaS model (Software as a service). This model has the advantage of being scalable, that is to say allowing an exponential increase of revenues related to increased usage. It is also an important argument for Farouk Meralli to indicate that most of his income comes from the actual use of his platform: this encourages him to make it ever more effective. This viable model has attracted investors such as 500 startups, the largest accelerator in Silicon Valley and a major investor in emerging markets. Figure 3: fund-raiser signature with Dave McLure, founder of 500 startups What challenges have been encountered? The main challenge for Farouk and mclinica is time. To act, it was necessary to face the different regulatory requirements, to guarantee the respect of patient data, and to work on medication prices on regulated markets. Beyond the time required for implementation, and in addition to the length of the necessary legal time, the time spent negotiating with large pharmaceutical groups, sales cycles, lasts between at least four and six months. Then, it took time for independent pharmacies to discover the solution, one by one. Finally, it was necessary to create a bank link with each pharmacy, to allow their reimbursement. 6

What are the objectives of mclinica? Currently, mclinica consists of 30 people, of whom half are based in Manila and 10 are in Indonesia.

Farouk Meralli is convinced that he has the team and the means he needs to establish his development in South Asia.

When asked if he is looking for funds to expand to other countries, he answers: Not right now, we are still in the early stages of internationalisation.

Until then, and beyond its geographic expansion, mclinica wants to grow vertically through new products and services.

8 What are the objectives of mclinica? Currently, mclinica consists of 30 people, of whom half are based in Manila and 10 are in Indonesia. Their profiles range from IT developer to data analyst, to sales representative for pharmacies and pharmaceutical companies. Farouk Meralli is convinced that he has the team and the means he needs to establish his development in South Asia. Other than the Philippines, mclinica is present in Indonesia, Singapore, Vietnam and Thailand. According to Farouk Meralli, he only needs 15 days to adapt mclinica to a local market. When asked if he is looking for funds to expand to other countries, he answers: Not right now, we are still in the early stages of internationalisation. Within a year, each market will have proven itself. We will have the attraction to raise even more funds and expand even more. Until then, and beyond its geographic expansion, mclinica wants to grow vertically through new products and services. The quantity and quality of data makes it possible to envisage creating insurance products. mclinica has also been able to assist governments, including in the Philippines, in making decisions about the allocation of health budgets. Governments allocate budgets based on studies that are sometimes dated. mclinica allows them to have more up-to-date and accurate data on the most prevalent diseases, and the regions that are most affected. The goal is to continue developing solutions on existing markets, by continuing to grow the number of patients that can be reached through this system, the number of pharmacies in the programme, the number of large partner groups, and the number of transactions. 7

9 What support partnerships are possible and relevant for mclinica? What mclinica needs most to fulfil its mission are: - Private partnerships with pharmaceutical companies - Public partnerships with public institutions (NGOs, Government, UNICEF, WHO, etc.) - Talents closely connected to the pharmaceutical industry 8

10 Conclusion mclinica offers a radically unique, different, useful in health terms, duplicable, and economically viable solution. - Unique and different Most e-health solutions are focused on telemedicine, or simply making appointments. Farouk Meralli believes that: Anyone, as a patient, thinks about creating a reservation platform where online consultations are possible without the need for medical or industrial expertise. The real problems are more complicated, less known and less understood. This is why there are so many startups based around these issues. However, mclinica intervenes on a link that receives little attention, but is nevertheless very concrete: pharmacies. - Useful in health terms Health benefits have been, and are, measured. - Simple Patients only need a phone number, pharmacies only need a phone with internet. - Duplicable mclinica has proven its replicable character in different countries, and only needs 15 days to adapt its solution to a local market. mclinica only needs sales representatives with a network in the pharmaceutical industry. - Economically viable Discounts for patients, a free service offering discounts for pharmacies, but which remains viable because it offers an interesting business solution for large pharmaceutical companies. 9

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