Alto Pharmacy’s founder Matt Gamache-Asselin discusses how he is disrupting the half-trillion-dollar pharmacy industry by fixing the "bad and weird" customer experience, particularly around health insurance. The company bought a small pharmacy to deeply understand operations, then built a digital platform that competes with giants like CVS and Walgreens by directly integrating with insurance. This episode offers insights into identifying and capitalizing on inefficiencies in massive, established markets.
Key takeaways
The pharmacy industry, despite its size, is ripe for disruption due to a universally poor customer experience, especially concerning health insurance navigation.
Deeply understanding the operational intricacies of an incumbent industry, even through direct acquisition (like Alto buying a small pharmacy), is crucial before attempting digital disruption.
New entrants, even from outside the core industry (e.g., Amazon in pharmacy), can be powerful catalysts for change and innovation in stagnant markets.
Building a digital platform that directly addresses core pain points like insurance processing can differentiate a new player from established brick-and-mortar competitors.
The intersection of healthcare, insurance, and retail offers significant opportunities for startups willing to tackle complex, large-scale problems with a customer-centric approach.
Healthcare and insurance aren’t the sexiest areas, but they are both ripe for disruption.
That’s why Matt Gamache-Asselin, co-founder and CEO of Alto Pharmacy, decided to enter the space, as he said on the Modern Retail Podcast. The five-year-old company has raised over $350 million thus far and has been building digital pharmacy to compete with the likes of CVS and Walgreens.
Pharmacies are a big umbrella to tackle. Gamache-Asselin estimated the entire industry to be worth half a trillion dollars. For him and his co-founder, the idea was to first and foremost fix one very big problem: health insurance. Rather than selling over-the-counter prescriptions or charging a concierge fee for healthcare services, Alto is quite simply an online pharmacy that works directly with insurance companies. He described going to the pharmacy to pick up a prescription as “an experience I think everyone would agree is bad -- if not at least kind of weird.”
To figure out how to go about it, Alto bought a small pharmacy in the Bay Area and to understand the industry. He learned “how different operationally [pharmacies are] from retail,” he said. From there, the company launched its digital platform -- which is now available in five major U.S. cities, including San Francisco, Los Angeles and Seattle.
On the program, Gamache-Asselin spoke about the overall pharmacy industry, and why he believes there’s so much room for improvement. He’s even excited about the big dogs coming in. “What I’m most excited about is the new entrants into the space,” he said, “especially a company like Amazon.” Why? In his words: “It can be a bit of a wedge to drive change -- which is clearly sorely needed.”
What does this episode say about founder & leadership?
The pharmacy industry, despite its size, is ripe for disruption due to a universally poor customer experience, especially concerning health insurance navigation.
What does this episode say about supply chain & operations?
Deeply understanding the operational intricacies of an incumbent industry, even through direct acquisition (like Alto buying a small pharmacy), is crucial before attempting digital disruption.
What does this episode say about brand & content?
New entrants, even from outside the core industry (e.g., Amazon in pharmacy), can be powerful catalysts for change and innovation in stagnant markets.
What does this episode say about ai & automation?
Building a digital platform that directly addresses core pain points like insurance processing can differentiate a new player from established brick-and-mortar competitors.
What does this episode say about founder & leadership?
The intersection of healthcare, insurance, and retail offers significant opportunities for startups willing to tackle complex, large-scale problems with a customer-centric approach.
