App & PoS solution for pharma GPO model for the last mile

Presently, MedSource Group Limited https://medsource-group.com/  has a web-based  ERP system that is supporting over 100 of the members trade out of 594, a projected to 40-60% of our members who do not actively trade from the platform  owing to lack of the necessary ICT infrastructure. 

This presents an opportunity to enhance the ERP functionality through the development of an app and point of sale system.

The app and point of sale will function both offline and online supporting the members inventory control, customer management thus enabling them grow profits and decrease the attendant inefficiencies.

The app and PoS system will support the point-of-sale management, facilitate inventory control, strengthen the accounting management and lastly strengthen the customer relationship management. PoS solution developed will be user-friendly and generally straightforward, helping members update inventory levels, present basic reports and keep track of customers.

Through the PoS the inventory control will be automate the management of supply levels and provides alerts when inventory levels reach pre-defined thresholds. Also the enhanced ERP functionality through the app and PoS system will provide reports on inventory movement trends. 

MedSource as a pharmaceutical GPO has a membership of 594 this is inclusive of hospitals, pharmacies, dispensaries and clinics. These members have presently served over 5 million patients since the inception of MedSource.These are drawn from 81% of the sub-national governments (counties) who predominantly are last mile based. These  sub-national governments are usually health under-resourced. 

The enhanced Enterprise Resource Planning platform via the App and PoS  will have a host of features that will give members an edge by being more competitive while simplifying your daily routines as they serve patients. Through the app and PoS the members will be in a position to generate real time in-depth reports to understand your business’s financials and reorder products thus increase your bottom line. 

Through the pre-negotiated offer deals, promotions and loyalty schemes with the distributors this has prospects of enabling them scale up their business.

This app and PoS will lower the members inventory management costs and improve your customers’ experience with a fully integrated retail and dispensing software rich with pharmacy-specific functionalities.

One of the products that MedSource has is inventory Financing that supports our members (hospitals, pharmacies, dispensaries, clinics) keep their business afloat while enabling them to scale up. 

Through the enhanced functionality of the ERP system, the App  and Point of Sale system will generate data that will guide in the decision making to determine the eligibility as well as the credit limits the respective members have.

The accounting data generated equally will provide accurate details on business performance. The CRM stores customer information and purchase history. Enabling the members to track contact information and preferred items to market to customers.

MedSource is the pioneer pharma GPO (Group Purchasing Organization) in Kenya and from the inception in 2017 and the onset of active trading from 2020, it is a proof of concept ready to scale.

An estimated 70% of the patients have the community pharmacy as the first point of call when in need of medical attention. These community pharmacies alongside the hospitals, clinics, dispensaries and pharmacies are spread throughout the country with the majority based in the last mile. 

These are the health under-resourced sub-national governments.  The business model is B2B thus our direct interface is with the dispensaries, pharmacies, clinics and hospitals who are our members. 

In turn these members are the ones who directly interface with the patients. The field team usually recruited from their respective regions engages the members on regular basis.

There are our staff in the field who engage our members, central to their core duties is relationship building and enhancing the customer experience. Through this, the staff get feedback from the members on the need to enhance the existing ERP platform through the development of an app and a point of sale system. Through such dipstick surveys and user experience this has informed the need to develop an app and PoS system.

The member community input, ideas and agendas have informed the design of this solution. The lead time taken in the members placing and tracking the order via the existing ERP platform vis a vis the ease of trading anticipated to be attained through the app and PoS system makes a compelling case to develop the app and PoS.

To illustrate, most place their orders while in their premises where their desktop computers are. For their operations, sometimes there are orders that are time sensitive thus the limitation to place orders during the working hours limits their business volumes. With the app and PoS the members can turn around this limitation by placing and tracking orders anywhere there is mobile network signal.

With the Covid-19 disruptions the members capacity building will be undertaken by uploading the training modules on the app. Thus the app and PoS having that added functionality which is a value add for our members.

Most of the members in the last mile have limitations in accessing a robust ERP platform that enables them trade effectively. With an increase in the members trading through our platform this will be one of the avenues for scale up. 

Further, as MedSource marketing team expands her membership recruitment drives this will translate to more members (hospitals, clinics, dispensaries and hospitals) in the last mile.

From a systems approach thinking, the innovation will go a long way in supporting strengthening the overall organization operations. 

MedSource being a med-fin-tech, the app and point of sale will be the integration point allowing members access capacity building, track their inventory, financial management through record keeping.

MedSource, the first pharmaceutical group purchasing organization (GPO) in Africa, has implemented an innovative technology-based business model in Kenya that gives its members (small and medium hospitals, pharmacies, and clinics) access to quality-assured medicines at discounts formerly enjoyed only by larger players.  Today, the enhanced platform forms the engine of the MedSource business model, driving transparency and efficiencies of scale.

 In short, MedSource seeks to reduce costs while promoting quality across the entire pharmaceutical supply chain through its membership of hospitals, clinics, pharmacies, distributors, and manufacturers. This is done by:

• Working with suppliers (manufacturers, importers, and distributors) to streamline access and reduce the overall cost of medical supplies.
• Aggregating purchases from our members and directing them to a selected group of suppliers, resulting in larger volumes for those distributors and manufacturers.
• Not purchasing or stocking medications or related health commodities. Instead, we provide our members with a platform through which they can place orders directly with the suppliers at MedSource-negotiated price points.

MedSource does not change how its members operate and conduct business with their own suppliers, particularly regarding ordering, stocking inventory, payment, and other routine logistics. Members can view all available prices from various distributors and manufacturers, observe stock levels and ultimately place orders from their preferred supplier in a simple and efficient way.

Finally, MedSource offers inventory financing, which allows smaller volume members to place larger orders with upfront financing through an arrangement one of the leading banks – a service that has contributed considerably to MedSource’s revenue growth.

Our impact goals for the next year and five years are outlined in the previous questions. The means for achieving these goals are the following:

• Expand the number of products included in the MedSource online catalogue to 20,000, and to 50,000 in 5 years
• Extend our reach into Tanzania, Rwanda, and Uganda
• Provide gross savings of about 30% average to patients.
• Deliver capacity building programs to drug dispensers on rational pharmaceutical management and business skills.
• Create supply chain efficiencies that lead to lower costs and better pricing.
• Reduce costs through group discounts and price negotiations with 3rd party logistics service providers.

MedSource is a member of the UN Global Compact, this in part underscores her commitment to contributing towards the attainment of the UN Sustainable Development Goals.

As previously mentioned, MedSource’s platform generates a wide range of data and analytics that serve to gauges the company’s performance. 

Every week, the CEO provides updated sales and revenue figures to the stakeholders; similarly, MedSource produces a Monthly Performance Brief for board members and stakeholders that uses routine data to report on key performance indicators, such as: sales against targets, profit and loss, trend variance of cash flows, growth of membership, membership onboarding flow analysis, product movement and savings, market penetration, and revenue generated through the inventory financing service, as well as payment rates.

The pharmaceutical ecosystem in Kenya consists of manufacturers, distributors, and dispensers. All play a role in supporting the estimated 5,000 health facilities countrywide. The dispenser at the community pharmacy serves as a critical interface with the health system since it is the first point of call for primary care for about 70% of patients.

Manufacturers. Kenya has 23 pharmaceutical manufacturers in country. Kenya is the largest producer of pharmaceutical products in the Common Market for Eastern and Southern Africa region.

Distributors. The Kenya Medical Suppliers Agency distributes drugs to government health facilities and private health facilities. The mark-ups at each point in the system vary across product lines.

 Dispensers. There are 5,200 retail dealers in Kenya, staffed by registered pharmacists and/or pharmaceutical technologists. Another 15,000 outlets are not fully licensed or manned by qualified personnel. These pharmacies customarily apply a 33% mark-up on retail drugs. Prescription drugs account for roughly 78% of the market.

The pharmaceutical value chain is subject to breakdowns, all of which affect consumers’ ability to access affordable, quality drugs and pharmaceutical supplies. These include:

• Dispensers’ limited access to cash flow and credit limits procurement volume discounts, resulting in higher prices paid that are passed on to consumers; it also results in stock-outs and loss of sales
• Unreliable delivery of drugs by suppliers
• Limited transparency throughout the supply chain, from distributors to patients
• Counterfeit medicines
• Lack of manufacturer price discipline
• High prices for patients and payers; intermediaries’ margins account for an excessively high 50% of a pharmaceutical product’s final price

MedSource provides a technology-based pharmaceutical procurement platform, which allows dispensers to purchase a range of medical products from prequalified distributors, who pay an administrative fee to MedSource, as a percentage of purchases. Participating manufacturers and distributors agree to advantageous pricing for MedSource members based on anticipated sales volumes and associated increased market share. Manufacturers support the distributors’ discounts for selected products through rebates passed on to distributors through MedSource. These processes and terms are captured in contracts between the parties, and ultimately translate into high-quality products at measurable savings for consumers. 

App and point of sale systems development is an iteration to the existing Enterprise Resource Planning platform.

Being based in and incorporated as a Kenyan entity, MedSource boasts a young all-Kenyan staff, with an average age of 28, representing 8 tribes. The gender split is 60% female and 40% male. The CEO is a Kenyan, Indian-born national who has lived in Kenya and worked in Africa for 27 years.

MedSource’s values are embedded in its imperative to eliminate the barriers to making quality medicines available and accessible to all. This alone makes MedSource an organization that is mission driven and market adjusted.

MedSource boasts a highly professional staff who left other thriving concerns to join the MedSource crusade. The distribution of skills and areas of expertise necessitate the distribution of leadership across enterprise domains. MedSource must and does function has an integrated team, with team leads having considerable autonomy to do the work and solve problems in the most efficient way possible. 

MedSource’s business model involves two principal beneficiaries: suppliers and members. A MedSource supplier is a manufacturer, importer, wholesaler, distributor, or similar entity legally registered and licensed to store, sell, and deliver pharmaceuticals and health care products. A MedSource member is any party who purchases pharmaceuticals and health care products from a supplier under agreed-on pricing and terms and conditions of supply and is licensed to dispense them to patients. Conveying savings and market share to these two parties directly benefits consumers by improving their access to pharmaceuticals and related supplies and their quality and affordability.

MedSource uses procurement volume to negotiate discounted prices with suppliers, thereby reducing costs, and distributes the savings to members, and ultimately, patients. Patients can count on price reductions of 10-30%, improved access to better-quality, legitimate medicines, and pharmacy technicians, who are better trained and equipped to execute their functions.

Members benefit from our innovative platform, savings as high as 24%, capacity-building programs, access to competitors’ prices, transparency from purchase to receipt of goods, and access to both credit and transaction data.

Further up in the value chain, suppliers benefit from the aggregation of members, the potential for increased market share, the ability to track products in real time to the last-mile point of dispensing, data on demand and pricing variability, and credit protection.

MedSource has a business model that is designed to scale; its operations have been planned to enable it to expand the customer base and increase sales.

MedSource’s path to financial sustainability requires revenue from both the commercial and social endeavors.

With regard to the commercial sector, MedSource will continue to generate revenue from:

• Contract administration fees from prequalified distributors based on volume of sales.
• Rebates from manufacturers for products traded through its platform.
• Margins on the inventory financing service. 

Funds are provided through an e-wallet preloaded with a credit limit and offered to members based on their credit risk, inventory needs and cash position portfolio. This revolving fund pays the distributors for orders placed through the platform, while earning extra discount on products and higher fees based on higher levels of product movement.

 In the future, MedSource anticipates commercial revenue from:

• The sale of advertising space on the platform.
• Licensing fees from the government for use of the platform to ensure the smooth and transparent movement of products through the supply chain.
• Equity investments for the inventory finance service, expansion into the region, and Kenyan operations.

MedSource is also keen to secure donations and grants. MedSource has reduced the price of medicines between 10-30% by shortening the supply chain. 

Infusing funds into MedSource would show a commitment to growing the private sector in the developing world. Moreover, MedSource, through its quality control measures addresses the challenges of counterfeit drugs and unlicensed dispensers, both of which impede the path to better health services. 

To date, Medsource has received $5.985M in investment funds from its parent company, MSH. The funding is comprised of equity at $2.86M, shareholder debt at $2.61M and shareholder advances at $514,900.

In terms of revenue, between April 1, 2020 and April 30, 2021, MedSource had a turnover of $973, 875. This was a blend of administrative fees ($899,414) and cash discounts ($74, 461) generated by the inventory finance margin. The net income from this activity amounted to $101,443.53.

With regard to licensing fees, grants and donations, Medsource is working to solidify the revenue streams over the course of the year.