Capsule, a New York-based online pharmacy that promises same-day free delivery, has opened in the North Loop, making Minneapolis and the Twin Cities its first expansion territory outside of Manhattan.
Capsule, in seeking to be the paramount online disrupter in the emerging digital-pharmacy industry, has received notice for raising about $250 million in capital over several years, including $200 million last fall.
The company is the brainchild of CEO Eric Kinariwala, a Stanford MBA from Michigan, who worked in private-equity investments and who had a bad experience at a chain-story pharmacy in New York about six years ago that got him thinking.
After an hourlong wait to fill an antibiotic prescription to treat a sinus infection in the basement of a Duane Reade drugstore on the lower east side of Manhattan, Kinariwala finally learned from the next-up pharmacist that he was out of stock.
"I wasted that time and no medication and that may have been the one thing they should have had in stock," recalled Kinariwala. "We all have those moments. It made me curious.
"I just started digging and poking around and found that the experience is not all that uncommon. It's not just the consumer, who kind of becomes the pinball. It's the doctor and the insurance company. And the experience can lead to bad health outcomes."
According to the National Association of Chain Drug Stores, its industry provides about three-quarters of doctor-written prescriptions in the United States. But it's not a full-proof system, according to a telling article several years ago in the industry's magazine that was compiled from a variety of sources.
In short, there are a lot of breakdowns. For example, it was estimated that a third or more of prescriptions written are not relayed to a pharmacy, up to 50% are not picked up by patients, up to 75% of medications are not taken properly and around 80% of prescriptions are not refilled as prescribed. That's a lot of miscues in a $475 billion-annual industry.