1. 1 The Green Box Pharmaceuticals Distribution System Startup Lab Graham Seibert June 4, 2009

2. 2 What leads me here?  Investor, writer, problem solver and entrepreneur  ERP software business  Technology investor  Teacher and student  Volunteer with Ukrainian retirees

3. 3 Ukrainian retail pharmaceuticals market  About two billion dollars; 1/3 per capita sales of Hungary or Poland  25% historical growth rate  Fragmented and inefficient  Poor service to remote and elderly

4. 4 Secular shifts in world pharma market  From communicable disease to lifestyle disease  Evolving need for long term medication:  Circulatory  Digestive  Lifestyle  Expanding use of pharmaceuticals

5. 5 Our premise: Improve drug distribution in Ukraine  Help customers make informed decisions  Provide what customers want, when they want it, and at the price they want  More efficient than legacy pharmacies  Remains of Soviet system  Many newcomers in retail, small and local  Many small distributors

6. 6 Buying drugs today Goes to pharmacy Buys drug if they have it If not, special order or go somewhere else Place an order (replenishment or special) Wait for delivery

7. 7 How Green Box Works Goes to pharmacy, research drugs Buy in-stock drugs Special order Replenishment Order Order Status Shipping info Replenishment Shipment Reorder from suppliers Order status from supplier Direct ship to customer Warehouse Replenishment

8. 8 Early Internet providers  Require user familiarity with Internet  Do not substantially improve logistics  They miss the most poorly served. Not a viable market yet, but our eventual target? They are:  Poor  Unfamiliar with Internet  Difficult to reach with deliveries  “Unbanked”

9. 9 How will you reach the market?  Phase 1: Improved distribution of information and product through existing  Bricks and mortar pharmacies  Personal relationships  Phase 2: Direct order, direct customer delivery

10. 10 Our advantage: overcoming weak points in present system  "Everybody has the Internet" – make better use of telephones  Push Information, order entry to local pharmacy or customer's home. Provide more information.  Reduce travel and inconvenience  Provide improved service: more in stock, rapid order processing, easier payment

11. 11 Problem Problems  Building customer trust  Making customers comfortable with computers and the Internet  Training our pharmacist partners  Pricing compatibility between Green Box and participating pharmacists Green Box must resolve these adequately, but not fully, in order to succeed

12. 12 Opportunity Problem 1: Payment by the unbanked  Common methods are cumbersome:  Pay a middleman: the pharmacist  Pay on delivery: COD or messenger  Bank account  Credit card / Money account  Opportunity:  Physical deposit of cash  Transfer credit by phone

13. 13 Opportunity Problem #2: Nationwide Distribution  Present Nationwide Logistics  Postal Service  Buses and marshrutkas  Distributors/delivery services serving small businesses  Opportunity:  Network marshrutkas and/or distributors using cell phones, scanners, IT

14. 14  Estimate that existing pharmacies average $20,000 business per year  Per order is a better metric  Volume is key: high fixed, low variable cost. Revenue Scenarios

15. 15 What people do you need to get to the next stage ?  Pharmaceuticals expert:  talk to pharmacists and work out prototype agreement.  Determine sources of supply  In-country logistics experts  Can we contract some logistics operations?  Warehouses, delivery services,  Bank/payment analyst  IT: Select software packages, write system specifications  Policy and procedures writer

16. 16 How much time do you need to get to the next stage ? TaskMos Spec package software & select vendors3 High-level specifications for custom software2 Research relationships with pharmacists2 Research warehouse & delivery options3 Draft policy and procedure1 Determine sources of supply: distributors, direct import2 Research legal and regulatory issues; government relations 2 TOTAL: 15 man months; 5 calendar months15

17. 17 Cost to get to next stage Salaries10 Professional fees3 Travel2 Total Estimate$15K

18. 18 More than money…  Project needs committed team  Project needs people who know Ukrainian business