This article first appeared in Digital Edge, The Edge Malaysia Weekly on January 10, 2022 - January 16, 2022

While working in the Southeast Asian medical device industry, Dr Priti Bhole travelled extensively to meet distributors and manufacturers. It was during this time that she realised the structure of the whole system was inefficient and ripe for some digital disruption.

Traditionally, clinics procure supplies by calling or texting a company’s sales representative to place an order. On the other side of the equation, sales representatives from the distributors and manufacturers are forced to visit clinics individually to promote and sell their products.

The process was very tedious, she says, and sometimes intense, especially for clinics with an urgent order. “Imagine you’re buying groceries weekly and you need to go to the sales representative just to get supplies, even though it’s a recurring purchase. It can get very tiring, especially for smaller clinics that only want to procure a small number of supplies,” she explains.

“Usually, clinics have to hire someone just to procure the medical supplies, although it takes only 10 to 15 minutes a day. On the other hand, suppliers have to hire as many sales reps as possible to push out products. In both these scenarios, there is an additional cost because these people need to be trained to understand the medical supplies and devices.”

When looking at the industry from a regional perspective today, the market is still very fragmented and tough to consolidate.

“Mature markets like the US and the UK already have a marketplace, but those markets are bigger and the regulatory structure is the same. But when it comes to Southeast Asia, each country is like a small city because the markets are small.”

And not only are each of the markets small, they are all subject to different regulations and authorities. “We actually discovered that nobody wanted to create a marketplace in the region because of this.”

This is because a medical product’s regulation and registration cycle is very different in each country, and Dr Priti says in order to build a regional solution, they need to bring on board people who have in-depth knowledge of each of the markets. This is especially important when dealing with high-risk medical products.

“High-risk products are categorised as Class B, C, and D. Low-risk products are class A. So, if a product is Class B in Singapore, it might be Class A or even Class C in another country. That’s why it is important to understand, from a regional perspective, what can be imported under which licence, and we need expertise to do this.”

For example, a device that goes into the heart, like a stent, or something that goes into the vascular system is Class C or Class D while a device to drill teeth is Class B. The different classes depend on the risk of using the product on a patient by a healthcare professional.

This was clearly a problem that needed to be solved for the benefit of clinics and distributors, as the market was fragmented, labour-intensive and had an unproductive workflow. Dr Priti shared her concerns with Raman Chauhan, and the pair decided to build Lumiere32, a business-to-business (B2B) medical supply procurement solution.

Using the solution, manual procurement processes will be a thing of the past for clinics. With Lumiere32, they will not need to rely on sales representatives to discover a product’s price and availability, as all the latest products, prices and promotions are displayed on its page.

Dr Priti adds that clinics will also be able to purchase stock from multiple suppliers, and if they purchase from 10 to 15 different suppliers in one go, it will be consolidated into a single order for convenience.

“When we started [in Singapore] in 2016, it was mostly dental supplies because I have a background in dentistry. But soon, we started getting registrations from medical clinics and enquiries for specialised medical products. So, in 2018, we started offering medical supplies too, and now 40% of our product portfolio is medical [the rest being dental],” she says.

Lumiere32 started with just three suppliers and 10 brands on its platform. In less than five years, the company has onboarded over 70 suppliers and more than 300 international brands on its Singapore platform, and it envisions a similar trajectory in the Malaysian market.

The company has been operating in Singapore for the last five years. Dr Priti, who is currently the chief operating officer, says it was natural to enter the Malaysian market as the two countries are similar in demography and country regulation.

Dr Priti says the medical device market in Malaysia is worth US$2 billion (RM8.4 billion) and is expected to grow 7.5% in 2022 and 2023. Healthcare expenditure in Malaysia is currently US$8 billion to US$10 billion and is expected to grow to US$30 billion by 2027.

When Lumiere32 started its Malaysian expansion, it was perceived as a tech company, so many questioned why it had bothered to obtain a medical device licence. Dr Priti explains that since the company is situated in a very niche B2B market, she wanted to make sure that a lack of regulatory approvals would not stand in its way.

“Initially, we were informed that medical device licences are not required to run an e-commerce website, but we still obtained all licences required by the Health Science Authority of Singapore to ensure there aren’t any compliance loopholes. And since we launched in Malaysia, we have taken licences from the Medical Device Association (MDA) and the Good Distribution Practice for Medical Devices (GDPMD), which covers the import and export of wholesale medical supplies,” she says.

As the company applied for the licences during the pandemic, the process took about three months to complete, especially since they were not able to travel to Malaysia to kick-start the launch of the local chapter.

Dr Priti says that since launching in July, the company’s local expansion has developed rapidly, as local suppliers and clinics are more open to tech solutions, thanks to tech advancements seen during the pandemic.

When Lumiere32 was operating in the pre-pandemic landscape, its biggest issue was getting small and medium medical supply companies on the platform. Dr Priti says it mobilised an on-ground team to help them onboard their products onto the website.

“Most suppliers do not have technical knowledge of how to upload products and put the correct permissions onto the website, so we step in and hold their hands,” she says, adding that now, the platform hosts many small and medium enterprises (SMEs) and mom and pop suppliers that have been operating for generations with no prior digital presence.

“We do have a warehouse to store fast-moving products because we do not want to go back and forth to the suppliers as we usually receive orders for these products every day. We keep it on a consignment basis in our warehouse.”

A significant pain point and challenge in the medical supply procurement industry is payment terms. Dr Priti says this is not exclusive to Malaysia, but it is seen in the whole region as most clinics prefer a 90-day or 120-day payment terms to maintain their cash flow.

On the other hand, the medical suppliers are mostly mom and pop shops and they too need the cash to maintain their inventory and cash flow. Dr Priti says this creates a very tense relationship between the supplier and the clinic, especially when suppliers are trying to collect payment from the clinic.

With this in mind, Dr Priti says Lumiere32 is enabling buy-now-pay-later (BNPL) services on its website, which allows clinics to get a 90-day payment term and for shops to get their money for inventory and cash flow.

“Not all suppliers are willing to take the risk of giving longer payment terms to clinics, especially if they are new, and they have a common pain point among them, which is to maintain cash flow. The incorporation of BNPL technology and services will really alleviate the pressure on both parties,” she says.

“We are successfully doing this in Singapore and was launched in Malaysia end of last year.”

Another pain point, says Dr Priti, is the manual monitoring and maintaining of inventory at clinics. She says if you were to ask a clinic or hospital how they are maintaining their inventory, they will most likely show an Excel spreadsheet with the products stocked on the shelf and the expiry date of the stock. But if you were to ask them how many units are still on their shelves, there is no way to tell.

So Lumiere32 developed Pay32 Clinic, an inventory analytics software to help clinics to digitise their inventory as well as monitor usage and stock. All they need to do is scan the purchase invoice and it will be uploaded into the system.

“On the dashboard, the clinics can see what they have purchased from a particular supplier and how many times, how much they saved with discounts and promotions, what are the SKUs (stock-keeping units) on the shelves and the expiry dates of the items,” she says.

The software is free to use for the first 200 clinics, for Lumiere32’s first six months in Malaysia, after which it will be a subscription-based payment model. Dr Priti says the software is currently being used in Singapore and was rolled out in Malaysia end of last year.

Dr Priti says Lumiere32 is working on broader solutions to help the regional market expand beyond country borders. She says, currently, there are no cross-border platforms that allow transactions to be done outside of the region, such as with the US, the UK and India.

If a clinic or hospital wants to procure supplies from another country, it needs to be done manually by calling or texting the supplier. With Lumiere32’s new platform, Southeast Asian SMEs will have a presence in other countries that are typically beyond their reach.

“Right now, the Malaysian website is only for Malaysian customers and the Singaporean website is for Singaporean customers. There are hardly any cross-border transactions between the two countries, unless a company has a presence in both countries,” she says.

“With the platform, clinics and hospitals can access local and international suppliers directly from the platform, specifically through the suppliers in Singapore and Malaysia. So this is a cross-border platform that we are building for export purposes.”

A lot of medical manufacturers in Malaysia and Singapore could benefit from this cross-border platform as it gives them a foot in other markets in the region and the world. Dr Priti foresees it becoming a solution for local SMEs and manufacturers to export their products to other countries.

Lumiere32 currently has a presence in Malaysia, Singapore, the US and Vietnam. In the next two years, the company plans to penetrate Thailand, Indonesia and the Philippines

Touching on the MyDIGITAL initiative, which was initiated to spur the local digital economy, Dr Priti says the first thing that comes to mind is 5G and internet penetration as these will be game changers for local healthtech players, especially when it comes to reaching remote communities.

The mission of MyDIGITAL aligns with Lumiere32’s as well, she says, as its mission is to provide supplies to remote communities where medical supplies are scarce or inaccessible, especially in light of Covid-19.

“We have sent medical supplies to India and the US, in the regions that are usually difficult to reach, and even if the recipient were to arrange their own logistics, it is usually difficult to find the place as it is so remote,” she says.

“With 5G and better internet connectivity, we will be able to get orders from clinics in remote areas and they too will have access to more suppliers.

Lumiere32 will also be able to bring local healthtech and medtech solutions before a greater audience, says Dr Priti, as they would otherwise need to go through the traditional distribution channels in order to create awareness of their products and solutions.

“We have actually helped healthtech and medtech start-ups by allowing them to promote themselves on our website and create awareness about their products. I think this is where we really can help local SMEs and innovators to reach the right audience.”

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