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Digital-focused pharmacy Capsule opens in New York

Capsule delivery service
Source: Capsule
Capsule delivery service

This new pharmacy would prefer if you didn't walk into the store. Really.

The digital start-up Capsule, which opens for business Tuesday in New York City, is looking to compete in the already crowded Big Apple pharmacy market by focusing on home delivery of prescription drugs.

At the same time, Capsule is eschewing selling customers candy, soda, shampoo, greeting cards and other nonpharmaceutical items, unlike many of its 2,500 existing competitors in New York City.

Capsule aims to solve what its executives call the "existing pain points" of conventional, bricks-and-mortar pharmacies: long wait times to get prescriptions filled; having to return to the store because a drug is out of stock; uncertainty about how much a drug will cost a patient; and getting questions answered about drugs.

Instead of walking into a store, most of the start-up's customers will get their medications hand-delivered by couriers dispatched throughout the city — with the temporary exception of Staten Island — via bicycle, buses and subways, and by foot, after their doctors file the prescription electronically. Delivery is free.

To build its business, Capsule will rely on consumer and doctor awareness. Patients can request Capsule by name, or doctors can recommend it. Prescriptions are filed electronically by doctors and then are filled by the pharmacy.

Eric Kinariwala, founder and CEO of Capsule, and Sonia Patel, chief pharmacist, Capsule.
Source: Capsule
Eric Kinariwala, founder and CEO of Capsule, and Sonia Patel, chief pharmacist, Capsule.

"It's going to be a lot more efficient and faster," said Eric Kinariwala, Capsule's founder and CEO.

The company says its "predictive inventory management" technology will ensure that the medication customers need will always be in stock. Doctors will be digitally notified when a patient has picked up a prescription, and patients will be notified the same way when a refill is scheduled.

Capsule will also offer customers the chance to ask questions about prescriptions via phone, text, its website and a new Capsule app. Customers will be informed, in advance, what their copayment will be for their medication.

"Capsule is different," Kinariwala said. "We're completely rebuilding the pharmacy from the ground up."

The company has one store, a small location in midtown Manhattan, which is also where its business office and inventory are located. Though customers can pick up prescriptions there, "it's not really designed for people to walk into," Kinariwala said.

"We think eliminating folks going into the store is one way of creating a better experience or energy," he said.

While Capsule is launching its new way of running a pharmacy in New York City, Kinariwala said, "This would certainly make sense in a number of other markets across the country, if not most everywhere."

"And we think we're going to get there in short order," he said.

Capsule pharmacy office
Capsule pharmacy office

Kinariwala previously worked in investing at Bain Capital and Perry Capital. To start Capsule, he received an undisclosed amount of funding from Thrive Capital.

The managing partner at Thrive Capital is Joshua Kushner, a co-founder of Oscar, a New York-based health insurer that was started to take advantage of the business opportunities offered by new Obamacare insurance markets.

Since its launch, Oscar has sought to distinguish itself from more established insurers by marketing itself heavily to digital-savvy consumers, and by claiming to simplify customers' experience.

Capsule's press materials emulate Oscar's clean, cartoon-design aesthetic. And the company's executives, like those at Oscar, portray their venture as one that offers a simpler, digital platform that is a much-needed update to the old-fashioned way of doing business.

Capsule's team includes Chief Pharmacist Sonia Patel, who previously worked for Sam's Club's pharmaceutical division troubleshooting underperforming pharmacies.

Patel has developed what she called a "digital solution" to simplify the often complicated, small-font printed instruction sheets that come with medication.

"We've broken down the information into bullet points that are easier to understand ... important things you need to know" about a prescription, Patel said. "We send that over to you in a digital format, whether that's email, text or chat."

Tim Vetter, who built and managed the mobile engineering team at Foursquare, is head of engineering at Capsule.