Practo, a company based in Bangalore, India, raised $55 million (€51.2 million) in January 2017 in Series D founding in a round led by Chinese company Tencent.
Practo now has a total funding of about $180 million (€167.6 million). Specializing in the eHealth sector, the company offers various services, including a digital platform allowing patients to access a list of doctors practicing in their area.
Established nine years ago, Practo has managed to develop a business model now stabilized. However, some experts believe that its competitors – increasingly numerous – are likely to harm the development of the Indian group and that health professionals will ultimately reject this kind of model forcing them to pay to be referenced online.
Objective 2017: create a digital space to connect health professionals worldwide
US firms Thrive Capital, Ru-Net, RSI Fund, Sequoia Capital, Matrix Partners, CapitalG (Google Capital), Altimeter Capital, Belgian group Sofina and Russian millionaire Yuri Milner are among the investors who participated in the round conducted in January. They are grouped under the name « Practo PTE, » a Singapore-based company.
Founded in 2008, Practo aims to improve access to care and health data in emerging markets:
- The group offers analysis and expertise in business development for its partners to help them settle in the health sector;
- it connects consumers with healthcare providers worldwide (practitioners, clinics, hospitals).
The platform developed by the Indian company currently lists 20,000 practitioners, 10,000 hospitals and 5,000 diagnostic centers. It is available in India, Indonesia, the Philippines, Singapore and Brazil.
Thanks to the last round of financing, the group will be able to continue its expansion internationally.
« Over the past year, Practo has seen 90 percent growth in patients, 80 percent more appointments booked, eight times more reviews from users and more than 5 million health records shared on the platform, » Shashank ND, the company’s CEO, said on the firm blog.
In 2016, the group acquired Indian company Enlightiks analytics to improve its platform and its business services.
Its goal by the end of 2017: providing a central infrastructure on which the entire ecosystem of the sector could connect, create, interact and exchange value « by linking layers of data, communication and payments to deliver better care ».
Practo: a business model based on the offer of a better customer relationship management
The group’s business model is based on two principles: the acquisition of companies and its own revenues.
The group has acquired five Indian companies since its foundation:
- 1. QikWell: a software for booking appointments online (SaaS)
Business model:
- selling advertising space to doctors and hospitals on its landing page and top results;
- onboarding fee for doctors, hospitals and clinics to unable them using the online appointment booking software;
- appointment booking fee from the doctor after the appointment is successfully booked and executed.
- 2. Fitho: via mobile LifeStyle, a mobile app which helps prevent diseases (freemium model).
Business model: freemium option for patients. Finally, the company was dissolved. The service is now part of Practo App.
- 3. InstaHealth: a hospital management support software.
Business model: InstaHealth created a software selling to hospitals and clinics to help them for their day to day management. The tool is available as a SaaS based recurring payment solution.
- 4. Genii: a software development company.
This acquisition was carried out to better penetrate the health tech sector. The main purpose is not to make money with it.
- 5. Enlightiks: an analytic company.
This acquisition was carried out to better penetrate the health tech sector. The main purpose is not to make money with it.
Practo multiplies tools facilitating patients/health providers relationship
The central product of Practo is a web search engine allowing patients to find health professionals based on their geographical area, their specialty, etc.
Price: free for patients but not for professionals wishing to be referenced (free demo for a limited time).
Among the other services used by Practo are:
Practo Ray is a management software designed to help doctors in their daily practice. For hospitals and clinics, it is close to an ERP: the practitioner can control his activities from his digital profile.
Price: monthly subscription. This service represents the largest source of revenue for the group so far.
- Practo Profile
This tool allows physicians, hospitals and clinics to have more control over their digital profile. It includes the inscription on Practo, the management of their professional profile and facilitates the updating of information.
Price: free for patients, fees for professionals (doctors, hospitals, clinics).
- Practo Health Feed
Practo offers a kind of a professional network to enable physicians to post updates and health advice to their patients. Patients can follow the professionals of their choice.
Price: Free.
- Consult Practo
QnA tool for patients. Patients can ask questions publicly on the platform. Any doctor with a profile on Practo can answer.
Price: Free.
- Reach Practo
Through this service, advertising space can be sold on Practo website and app.
Price: available in different size of packages: monthly, quarterly, geographically, etc.
- Practo Tab
It offers hospitals and clinics a digital space, a Tab, to do some basic tasks such as book appointments, leave feedback, collect data…
- Practo and medicine delivery
The group purchases medicines in bulk and sells them directly to chemists and consumers. It also allows the purchase of medicines through chemists for delivery to consumers.
- Practo and booking spas, salons and gyms
Customers can now make reservations in spas, salons and gyms rooms via its platform.
Price: Practo could start charging commissions on these services.
Practo: a stable business model but ineffective in the long run?
The group’s expenses are important but essential at this stage of its development
PRATEC Technologies Pvt. Ltd. posted a more than 10-fold increase in revenue in 2016 (from March 2015 to March 2016), while losses increased 30%.
Its revenues increased to 297.3 million rupees (€ 4 million) in 2015, from 23 million (€ 314,427) in 2014. Its losses reached 128.5 million rupees (€ 1,8 million) in March 2015, against 98.8 million (€ 1.4 million) a year earlier, according to the Registrat of Companies (RoC).
According to investors, this development is a sign of a business model stabilization. « Businesses thrive only if revenue grows faster than expenses. Yes, there are losses. But, if revenue grows faster than expenses, at some point in time the company has the potential to become a profitable business, » said in January 2016 Rutvik Doshi, director at Inventus Capital Partners, a venture capital firm (Livemint.com).
Experts estimate that losses will rise further in the near future, as Practo recently acquired multiple companies and continues to grow internationally.
« In the short term, I would expect the expenses to balloon. It makes sense to pump in a lot of money at this juncture and capture the adjacent markets. In a year or two, they can again accelerate and the cost will be recovered, » said Mr Doshi.
Principal risk for Practo: the growth of competition and the creation of personal medical websites
Although the company is doing well today, some industry experts have spotted some weaknesses in the business model established by the Indian group.
« I agree that acquiring patients online is a great way for doctors to maximise their income, because it cuts out the referral fees the specialist in India needs to pay to the middleman, said Dr. Aniruddha Malpani, founder and director of Malpani Ventures (Indian investment company) in a post published on LinkedIn in August 2015. However, a major danger for doctors is that all their competitors are also listed on the same page, which means they are quite likely to lose their patients to their colleagues. Also, these sites do not allow the doctor to create patient engagement or loyalty, which means they don’t really enhance the doctor-patient relationship. »
He predicts the implementation of a paid version, as is actually the case today: Practo offers different packages to health professionals to benefit from its referencing service. As a result, doctors will no longer have any interest in being referenced by Practo, which should also face the emergence of new competitors, such as ZocDoc or JustDial, present in the same sector, but especially Google, « he Big Daddy of search ».
« Skeptical? Try doing a search for « neurologist in Mumbai » on JustDial, Google and Practo and see what you get. In fact, the Practo search results are the worst, because the results bring up lots of non-neurologists as well! »
In the long run, Dr. Malpani believes that doctors « will realise that it’s much cheaper and more cost effective to publish their own website. By owning their own digital real estate, patients will be able to find them directly, rather than having to go through a digital middleman who wants to extract his pound of flesh ! »