Next year promises to be a big one for 34-year-old Shane O’Sullivan. For the past seven years, he has turned a fledgling idea into a fully formed business with 25,000 customers. Now, though, he wants to take Healthwave, his digital pharmacy group, across Europe.

From its base in Dundrum, Dublin 16, O’Sullivan currently employs 30 people, including a team of pharmacists, dispensing technicians and coders serving a growing community of people receiving their drugs directly to their homes. Using advanced robotics and pill dispensing machines, Healthwave creates bespoke pillpods for people that contain all the drugs they need for a month.

They arrive in a roll of chronological pods each filled with exactly the right amount of drugs required for a given day, making sure that people with chronic diseases never miss a dose.

He has proved his model. But his ambitions do not stop there. Huddling inside a warm jacket on a winter’s day, the Ballincollig-born pharmacist and entrepreneur explains that he wants to raise between €50 million and €100 million next year to bring Healthwave’s model to Europe.

It sounds like a lot of money, because it is a lot of money. But then so too is the market for medicines: “It is heading up towards a trillion euro size market,” O’Sullivan says.

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The economic climate plays to Healthwave’s strengths. The high street pharmacy business is struggling due to high rents and Covid-19. As The Currency has reported on extensively Cara Pharmacies has had to be restructured by appointing an examiner. At a retail store level there is consolidation, cost-cutting and among some players carnage.

But there is also a wave of digital disruption coming, which Healthwave plans to be at the front of. It is already happening in the United States, and to a much lesser extent in Europe.

In May 2019, Amazon spent $750 million acquiring Pillpack, an online pharmacy for popular medications. In November 2020, the Jeff Bezos led giant launched its own digital pharmacy division which will deliver drugs to peoples’ homes using its Prime service.

Healthwave has been perfecting this business in Ireland for years so it sees the opportunity to take its knowledge and move fast and scale into other markets. O’Sullivan also thinks Healthwave’s experience delivering drugs to people suffering from complex conditions that can be life threatening will also give it an advantage versus Amazon which is targeting the lower end of the market. 

Before we get to fundraising, geographic expansion, advisory boards, and taking on Amazon, it is crucial to understand the backstory.

The genesis of an idea

Shane O’Sullivan got the idea for Healthwave in 2010 when he was working as a pharmacist in Cork. “I got kind of fed up with the price of medicines at the time,” O’Sullivan said. “I was getting a lot of stick from customers at the counter about the prices in Spain and Northern Ireland.

“People were going on their holidays and stocking up on medicines for the whole year. I got a bit disillusioned with pharmacy and the money being made and how patients were suffering as a result.”

In 2013, O’Sullivan started to work on the idea of setting up a low-cost pharmacy. “I analysed what drugs are being bought in the country. Healthwave started out really as ‘Let’s lower the price of medicines in Ireland for people.’ And we did that pretty successfully,” he said.

“We were mainly targeting people with what we’d consider chronic conditions. So, something that’s kind of lifelong where people need to get medicines every month.”

Orders rose by 40 per cent in March as people became more open to using online for treatments post Covid-19.

Essentially, the type of drugs Healthwave was sourcing was for common ailments like cholesterol, high blood pressure and asthma.

“We priced the drugs really cheaply and we put a membership around it. It’s kind of like Amazon Prime,” O’Sullivan said, adding that for an annual fee of €25 at the time Healthwave bulk bought drugs for its members allowing them to reduce their unit cost.

Healthwave also started delivering drugs to patients’ homes which was innovative at the time when patients were forced to regularly queue in pharmacies for what they wanted. It has its own drivers to deliver drugs in Dublin and has teamed up with An Post to send packages to patients in the rest of the country. Healthwave has been doing this since the end of 2014, long before Covid-19.

“We’ve been operating an online model of pharmacy for the last five years really. People can order from anywhere, send us in their prescriptions and get their medicines delivered,” he said.

The Covid effect

Before Covid-19, patients would post their prescriptions to Healthwave. But after emerging legislation came in post Covid-19, doctors are now allowed email subscriptions. “That was a huge thing for our business model,” O’Sullivan said. “The changes we have been advocating for for the last five years all happened in a couple of months which is brilliant.

“Our service now is fully digital. You can sign up as a member online. Your doctor sends us your prescription electronically and your medicines come every month by post.”

Orders rose by 40 per cent in March as people became more open to using online for treatments post Covid-19. “People were looking at how do I get my medicine delivered so a lot of people jumped over to us,” according to O’Sullivan.

Healthwave’s 25,000 members are split between individual and corporate customers. “We’ve been developing our corporate business over the last 18 months. It is a new channel for us as a company. What we would ultimately like to do is go into, say, a large tech company and put it in as an employee benefit for staff,” he said.

“In a lot of cases companies are already paying for medicines. But we can do it cheaper. We can also really simplify billing and the benefit-in-kind side of things. We are centralised so companies get a single invoice off us each month essentially.

“We’ve been going to big companies saying this would be a great thing to do for your employees like onsite gyms or online counselling.”

Healthwave is already offering the service at scale. It supplies all 8,000 An Post staff with medications they require each month.

For individuals Healthwave charges a monthly fee of €2.99 a month. “This includes unlimited free delivery and you’ve access to a pharmacist which is a big thing for us,” O’Sullivan said. “We think that technology can actually make the level of care you get better from a pharmacy.

“If you think of a traditional pharmacy, you go in off the street and you hand in your piece of paper and you wait around. You might or might not get to speak to the pharmacist, like invariably it’s an assistant.

“Whereas with our model, we’ve built a big centralised dispensing hub with a big team of pharmacists there all the time. So, you can access pharmacists 24/7.”

Healthwave has always invested in technology. “We’re unusual for a pharmacy because we have employed full-time developers from the start,” O’Sullivan said. 

What are your sales? “It will be in the five to ten million ballpark this year,” O’Sullivan replied, adding that the acceleration of online purchasing as a result of Covid-19 had a positive effect on his business. 

“We’ve been selling online for five years. The rest of the pharmacy industry was scrambling a bit when Covid-19 hit thinking about how to get medicines to patients. We were built for this from the outset really.”

“I think Covid’s kind of validated what we’re doing in terms of the model. We see the traditional model of having a large physical footprint of pharmacies as being really complicated and that’s even before high rents.”

Healthwave uses overhead cameras powered by artificial intelligence that can identify every bill

Were you surprised to see Cara Pharmacies go into examinership, Uniphar acquire pharmacy chain Hickey’s and so on?

“We have more pharmacies per capita than other countries,” O’Sullivan said.

He said he believed it made business sense and for patients better outcomes to have one big centre dispensing medicine rather than many smaller pharmacies.

“When you look at Holland they’ve set up big centralised dispensing hubs. They call it hub and spoke – you do still have these small little pharmacies in the town but they’re not actually doing any dispensing,” O’Sullivan said.

“They’re being supplied every morning by a big dispensing pharmacy. You go in and order and come back tomorrow and they have your package ready.”

This European model, O’Sullivan said, was becoming more and more prevalent, and would inevitably come here too.

Next step? Europe

Having established itself in Ireland, Healthwave now plans to go to Europe. It plans to do a big fundraise next year to get there, O’Sullivan says.

“We think there’s a big opportunity for our model in Europe. So, the idea of the fundraise would be that we set up a base in another European country and then distribute to the wider European market from there. The reason for that is Ireland has pretty tightly locked down the medicine supply, both within and the expert of it outside of the country. So, it’s much freer when you go onto the mainland of Europe,” he said.

For example, he said a hub in Germany could supply patients in many other European countries. In Ireland this isn’t as easy as Ireland hasn’t enacted all the relevant EU pharmacy legislation to full open its market.

“I think there is a fear that if we did it would open up online pharmacies and bring in more competition. But you know, I think the competition is probably coming anyway,” he said.

Is there much competition online? “There is. There are the ones that you probably know of, like Lloyds, Boots, and so on.

“But our model is we ship medicines in a roll, what we call pillpods. So instead of you getting five or six different boxes of pills and you take one out of each box every morning. We have them pre-sorted and personalised. This is all produced by our dispensing robotics.”

Healthwave uses overhead cameras powered by artificial intelligence that can identify every bill and ensure that patients are given the right amount and number of pills.

“Everything is through a camera and a photo is taken of every single pod and if there’s anything at all amiss it flags it and a pharmacist checks it,” he said.

“It’s a safer way of doing things. These machines are used in Holland in nursing homes. In other countries they are considered safer than pharmacists who are doing everything manually.

“I think error rates in pharmacies can be up to 15 per cent. Many errors are minor or get corrected before they reach the patient but not every error is spotted.  The error rate with this camera system is much lower, just 0.1 per cent.”

Using pillpods also delivered better outcomes for patients and countries by ensuring people with chronic health issues were more likely to take their medicines year around at the correct dosages.

“The opportunity really is around what would be known as adherence in the medical world,” O’Sullivan said. “Basically, people are really bad at taking medicines properly.”

Patients, he said, forgot to take their medicines or skipped a few days in between collecting them.

“That’s really bad for the health service in every country. People can often go up to four months without medicine over the course of a year,” he said. “Once you get to that you’re talking about people ending up in hospital with problems. So, the idea with this system is get that number up.”

 “Look, what we want to do is a big jump but it’s where we want to go, and I’m excited about it.”

Shane O’Sullivan

Healthwave’s system dispensed drugs and sent them to people’s homes every month without fail. Drugs have been sorted by robots into pods ensuring that people know exactly what drugs to take on a given day. “There’s no sorting through boxes,” O’Sullivan said.

“The goal of our model and this is really something that’s interesting to governments of European countries I think is if we can improve the way people take their medicines then there’s huge savings to be made in terms of hospital expenditure.

“We already have economies of scale because of our volume. We can buy very cheaply and we pass that onto the customer. Our model wouldn’t require the same sort of fees as a traditional pharmacy would require.

“Traditional pharmacies in Ireland would be paid a dispensing fee per medicine which is a big cost to the Government every year. So, like I think it would be interesting for the Government to look at these new more innovative models that instead of charging fees per item would have a fee for digital care.”

The HSE, he said, had shown it could adapt during Covid-19 by paying GPs for virtual consultations with patients.

If many pharmacies go digital what will that mean for the sector? “I think there’ll be consolidation.”

Raising funds

Breaking into Europe is going to cost a lot of money? “Yeah, it’s going to need to be a fairly big raise,” O’Sullivan said.

How much will you raise? “You’re talking…it will be more kind of a 50 to €100 million raise.

“The medicines market in Ireland alone is €3 billion. And that’s just Ireland. There’s still a huge opportunity for us in Ireland but we really do feel that there is a window of opportunity to put our system out there in Europe.

“It’s been done in America by a company called Pillpack who were bought by Amazon.”

O’Sullivan said it took Amazon two years to integrate this business fully into its operations.

“There’s no PillPack of Europe yet and we want to be that,” he said. Healthwave he said would however seek differentiate itself from Amazon by only selling products dispensed by trained pharmacists.

“Amazon will be really slick and cheap but they won’t just sell medicines. We are focused only on evidence based stuff. Like for example in Boots a lot of what they sell is actually retail like perfumes or beauty products. I think when it comes to your health people want access to professional people who can give them advice as well as a good price.”

Healthwave hasn’t yet appointed any firm to help it with its fundraising and growth plans. It has gotten some preliminary advice from KPMG and was preparing its pitch deck.

“We think there’s a €100 million revenue business in Europe for us and that’s what we think the opportunity is for us to go after. But we’re not underestimating the task either. We’ve proven that we can do this in Ireland and we feel now that we should go for it outside Ireland.”

 “Look, what we want to do is a big jump but it’s where we want to go, and I’m excited about it.”