Capsule gets $20M for app-based pharmacy delivery service

By Heather Mack
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Hand-delivering drugs in New York City: it’s actually a newer thing, and it’s what pharmacy startup Capsule is all about. With a fresh $20 million in a round led by Thrive Capital, with contribution from Sound Ventures and Virgin Group, the company is working to establish itself apart from other such virtual pharmacies like Blink Health and PillPack, as well as the behemoth pharmacy benefits manager Express Scripts.

“We are building the first holistic pharmacy system that works for everyone — the technology platform for consumers, doctors, hospitals, insurers, and manufacturers to exchange information about medication in real time feedback loops,” Capsule CEO and founder Eric Kinariwala wrote in a post on Medium.

That means positioning themselves as the pharmacy, accessed through an app, which allows doctors to order directly through Capsule. From there, Capsule deploys a delivery person to pick up the prescription and deliver it anywhere in New York City within two hours at no extra cost to the patient – they accept all major insurance and copays don’t change.  Patients do not have to have a Capsule account for their doctor to prescribe the first time, but if they like what they get, they can transfer refills from their old pharmacy to Capsule to keep the relationship going from there. 

Capsule was founded out of frustration, and a lot of investment and pharmacy experience: Kinariwala worked in investing at Bain Capital and Perry Capital, and Chief Pharmacists Sonia Patel has over 10 years experience in the pharmacy industry and was selected by Walmart to help troubleshoot underperforming pharmacies. The company cites figures demonstrative of a clunky, inefficient system as reasons they were prompted to create Capsule, such as the fact that nearly 40 percent of people have to make repeat trips to their pharmacy because it is out of stock and average wait times of an hour.

“We live in the country that pays more for healthcare than any other country, but our pharmacies aren’t working to keep us healthy,” Kinariwala writes. “The pharmacy industry is too large, too broken, and too focused on squeezing every last dollar out of legacy business models to innovate.”

But a startup could provide that nimbleness through technology, or as Kinariwala writes, do what clinicians, pharmacies, employers and insurers can’t do because of a drain on front-office resources and a lack of data visibility between stakeholders.

 “We interact with the pharmacy and our medication multiples more frequently than any other entity in the healthcare system. But pharmacies aren’t built to embrace the natural engagement point and deliver better care by building long-term relationships with people.” Kinariwala writes.

Startups looking to improve the pharmacy experience through faster, cheaper service and simple user interfaces have been attracting a lot of investment as of late. Blink Health, also based in New York City, just scored $90 million in second stage funding in April. Their approach is a little different than Capsule, in that they work like traditional pharmacy benefits managers (PBMs) to negotiate prices but with a decidedly different goal of lowering costs. Manchester, New Hampshire-based PillPack, which functions as a virtual pharmacy as well as medication adherence app, now reports funding at $93.1 million thanks to an additional $31.1 million round in September.

“Medication is disconnected from the rest of healthcare. By building tools and harnessing data to connect medication back to the system, Capsule is the platform which modernizes medication, leading to better experiences and better health outcomes to everyone’s benefit,” Kinariwala writes.