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An Overview of Direct to Consumer Telemedicine Startups and Pharmacies

We are experiencing a boom in startups offering medical diagnosis and treatment over the internet. You may have heard of upstarts like Roman and Hims who’ve raised a bunch of VC investment to bring medical services into patients’ homes via the web. But those aren’t the only two players making waves. Hundreds of direct to consumer brands have entered the business of prescribing Americans drugs and treatments online that previously required an in-person visit to the doctor.

 

The trend isn’t likely to slow down any time soon. Read on to learn why, discover a few of the best known telemedicine brands, and discuss the growth strategies that so many are adopting.



So what exactly is driving the proliferation of telehealth startups these days?

 

 

Underserved Patients

The traditional medical establishment in the United States is great at providing care to insured people in major urban areas. But, it fails to do so at a reasonable cost. According to the Peterson-Kaiser Healthcare System Tracker, the annual US per capita spending is over $10,000. That’s almost double the cost per person in other developed countries who average just a tad over $5,000. According to the National Association of Community Health Centers (NACHC), 62 million individuals in the United States currently have no or inadequate access to primary care as a result of physician shortages. These systemic problems have lead many doctors and entrepreneurs to develop telemedicine solutions with the potential to materially drive down the cost of care.
 

 

Recent Regulation

Regulatory changes have also been a catalyst for telemedicine as laws start to adapt to improvements in technology that allow for doctors to interact with and help patients from afar. The first example of this started over ten years ago when the medical community realized it could be safe to offer radiological services remotely, since the doctors who traditionally viewed these images often never needed to meet the patient in person. Digital images were displayed to radiologists, who then provided the diagnosis to the patient’s doctor. Since the digital images could be sent anywhere electronically, some hospitals began to rely on remote radiologists to view their images. This was particularly helpful in rural areas, where hospitals could not easily staff qualified radiologists 24/7.

 

Today, major telemedicine providers like TeleDoc or Lemonaid Health offer doctor visits via the computer or smartphone. While certain medications still can’t be prescribed online, many states have removed the requirement for a physical examination for a wide range of prescription drugs. As a result, telemedicine is growing rapidly every year (22% annually according to one estimate) with nearly 7 million Americans accessing care through online or over-the-phone doctors in 2017 alone.

 

 

Expired Patents

In addition to regulatory changes and growing demand among underserved patients, expiring drug patents have also catalyzed the rise of new telemedicine brands. Recognizing their opportunity to rebrand generics, it’s no coincidence companies like Roman, Hims, and Keeps all launched men’s hair loss subscriptions soon after the expiration of Merck’s patent on Finasteride in 2014. The same is true for popular drugs like propranolol (for performance anxiety) and sildenafil (for ED). One drug company’s loss is a new DTC telemedicine brand’s gain.



Top Direct-to-Consumer Telemedicine Startups

These telemedicine brands have attracted a substantial amount of venture capital funding to prescribe drugs online. Don’t see your favorite on our list? Drop us a note and let us know why you think ought to be included.

Hims Hair Loss
Erectile Dysfunction
Performance Anxiety
Premature Ejaculation
Acne
$197m
Series C
Redpoint
Founders Fund
SV Angel
Keeps Hair Loss $22.8m
Series A
First Round
Greycroft
Nurx Birth Control
STI Testing
$41.1m
Series B
500 Startups
Shasta Ventures
Roman (Ro) Hair Loss
Erectile Dysfunction
$176.1m
Series B
FirstMark
Waldo Contact lenses $6.8m
Series A
PROfounders Capital
YYX Capital
Blink All. Blink is an online direct-to-consumer pharmacy. $165m
Series B
8VC
PillClub Birth Control $61.7m
Series B
Y Combinator
Union Square Ventures
Kleiner Perkins
Rory Menopause $176.1m
Series B
FirstMark
Zero Smoking $176.1m
Series B
FirstMark
Cove Migraine $22.8m
Series A
First Round
Greycroft
Hubble Contact lenses $73.7m
Series A
Founders Fund
FirstMark
Greycroft
Lemonaid All. Lemonaid is an online direct-to-consumer pharmacy. $20.7m
Series A
Hikma Ventures
Novartis Venture Fund
Hers Hair Loss
Erectile Dysfunction
Performance Anxiety
Premature Ejaculation
Acne
$197m
Series C
Redpoint
Founders Fund
SV Angel

If you want to learn more about these DTC startups, we’d love to hear from you! We cover the telemedicine startups closely with many in-depth reviews comparing one brand’s offering to another. For instance, I recommend our comparison of Hers vs. Nurx vs. The Pill Club to get a feel for online birth control providers, or check out our review of Hims, Roman and Keeps for mens hair loss. Subscribe to our newsletter to stay ahead of the telemedicine trend and learn more about popular direct-to-consumer brands.



How are direct to consumer telemedicine startups growing so fast?

Besides the high demand for convenience and lower drug prices, there are several key factors driving the rapid growth of direct to consumer telemedicine startups. Here are three:

 

Tasteful rebranding of popular generics

While some telemedicine companies like Blink Health or Teledoc are essentially online pharmacies offer every drug under the sun, other DTC telemedicine startups are focused on branding narrow sets of generic drugs needed within niche groups. Examples include Ro’s family of distinct brands that now includes Roman (for men’s hair loss and ED), Zero (for smokers), and Rory (for women with menopause). Similarly Hims caters to males with hair loss and ED pills, but has also created a separate brand called Hers for prescriptions specific to women.

While it’s not hard to beat Cialis or Finasteride from a branding perspective, this new breed of telemedicine startups is investing a ton in their own brand image. Like Hubble contacts did, most work with high-end design agency to craft the perfect look, feel, and voice for their audience.

Note that these niched-down brands tend to focus on lower-risk prescription categories with cheap generics. No one has created a DTC telemedicine brand for blood pressure medication, for instance. Well, not yet, anyway… When that day comes, you can expect a sleek modern website

 

 

Heavy advertising investment

Although there’s plenty of red tape around advertising  prescription meds, new direct to consumer telemedicine brands are pushing the limits of paid media. Given the stickiness of their subscription offerings (high recurring revenue without high churn), these startups are willing to pay a lot to acquire new customers, shelling out buckets of venture-raised cash on social media ads, SEM, affiliate programs, and offline channels like radio, TV, and billboards. If you visit a DTC telemedicine brand’s site, don’t be surprised if you start seeing their ads everywhere!

 

 

Eye-catching free trials

Again, DTC telemedicine startups understand that Rx customers have a high lifetime value (LTV). Offering an appealing free trial is an effective way of drawing more people in the door. A “first month free” (or heavily discounted trial period) is almost universal among modern telemedicine brands. Check out the examples below:

 

 

 

 

 

What kind of treatments are top telemedicine brands disrupting?

 

We already mentioned how telemedicine startups have first focused on lower-risk drugs, but another common theme is a. focus on more embarrassing or taboo health conditions, often sexual or mental in nature. For men that means conditions like ED and baldness. For women, menstruation and acne. A major thesis behind this is that:

 

  • Patients don’t feel comfortable talking about these problems face to face, even with their doctor
  • Well-tested generic meds are now available to lower patient risk and cost
  • From a consumer’s standpoint, these companies’ solutions have real advantages over traditional primary care.

 

 

Why are telemedicine startups appealing to consumers again?

 

 

Greater Convenience

Physician visits can be close to automated, with minimal to absolutely no live conversation between the doctor and patient needed AND the goods can be shipped discretely to the consumer’s home, removing the need to pick up (embarrassing) medications at the pharmacy and talk to anyone in person.

 

Lower Price

Big pharmaceutical companies have paved the way by building brand awareness for their drugs, but now that these have come off their patents, Direct to consumer telemedicine startups are making cheap, completely equivalent medications available. Thus telemedicine startups can substantially lower consumers’ costs than what consumers are used to paying.



What are some of the outstanding questions about the space?

 

Telemedicine is still very much in its infancy, and there are many questions about these startups’ business models and how consumers will react to these offerings. Here are two burning questions on my mind:

 

Is bundling possible?

It’s unclear that an individual will want to get prescription hair loss, erectile disfunction and anxiety medicine from an online provider. It’s even less clear if it’s a good idea for someone with multiple health issues should get treatment from an online doctor, as there may be an underlying issue that should be diagnosed and treated in person by a primary care physician.

 

Will the doctors get the medical advice right?

The belief is that these online providers will be able to correctly (and safely) provide a diagnosis and treatment. The current crop of D2C telemedicine/pharmacy startups seem to have started with medicines that are well understood and have less adverse side effects. But will these doctors be able to identify the small number of patients who have serious underlying medical issues? What might happen if a patient has a serious problem that an in-person physician might have caught?



It's an exciting time to be a telemedicine startup!

Who knows what’s next, and which companies will take off. Hopefully direct-to-consumer telemedicine startups will be able to fix some of the major problems in our healthcare system, and help patients live happier, healthier lives.

 

If you work in telemedicine or at a direct-to-consumer company, we’d love to hear from you. Don’t hesitate to reach out anytime, or subscribe to our newsletter to learn more about top telemedicine brands and the Direct to Consumer space!

 

 

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