Echo, the medication management app, has been acquired by LloydsPharmacy-owner McKesson

Echo, the U.K. startup that offers an app to help you manage your medication and order repeat prescriptions for delivery, has been acquired by healthcare company McKesson, owner of LloydsPharmacy.

Terms of the deal remain undisclosed. However, I understand the buyout sees all of Echo’s existing investors exit, with McKesson becoming the majority shareholder and the remaining shares divided amongst Echo management and other staff. Echo was backed by White Star Capital, MMC Ventures, Rocket Innternet’s GFC, Hambro Perks, Public.io, and LocalGlobe.

Echo was founded in 2015 by Sai Lakshmi, who previously worked in biz dev for Apple, and Stephen Bourke, who (notably) was previously a manager at Lloyds Pharmacy’s online doctor service. Lakshmi stepped down as CEO of Echo in August last year and was subsequently replaced by ex-HelloFresh International COO Roger Hassan.

The Echo app for iOS and Android lets you order NHS prescriptions and get your medication delivered to your door. You simply tell the app the name of your GP and what repeat medication you take, which can be input using your phone’s camera and with the help of Echo’s NLP tech.

The app also alerts you when you need to take your medicine and when you are running low. When a new prescription is required, under your instruction Echo will send the appropriate request to your doctor and nominate a pharmacy partner on your behalf. Once approved by your GP, your medicine is dispatched by 2nd class post and you pay the standard NHS charge if applicable.

All of this is enabled by the way echo has deeply integrated with the NHS Electronic Prescription Service (EPS), meaning that it works with existing GP NHS England practice systems and tech, and doesn’t require extra work on the GP surgery’s part. The idea is to make medication management, especially for people who have chronic conditions and take regular medicine, as hassle-free as possible.

Meanwhile, the acquisition by McKesson creates a number of obvious and not so obvious synergies. With only an estimated 1% of prescriptions in the U.K. having moved online, the digital pharmacy market is still quite a nascent one but it certainly feels likely that more digitisation is inevitable.

Arguably, purchasing medication online has as much in common with e-commerce than health tech and the U.K. is one of the biggest e-commerce markets in the world. As another reference point, Amazon acquired U.S.-based Pillpack roughly a year ago to this day for just shy of $1 billion. In that sense, this deal could be seen as McKesson placing a bigger bet on digital in a bid to avoid innovator’s dilemma. Via LloydsPharmacy, McKesson has a lot of brick ‘n’ mortar stores.

However, as explained in a call with Echo CEO Roger Hassan, McKesson is very much in the pharmaceutical wholesale business, too, and is the wholesaler that Echo uses to purchase much of the medicine it dispenses. Buying medicine is Echo’s main cost, and the difference between wholesale price and how much the NHS will reimburse for a particular medication is where Echo creates margin. Now it is owned by McKesson there are more opportunities for economies of scale.

Another aspect that will be explored post-acquisition, is how best to leverage the Echo and LloydsPharmacy brands. One of Echo’s challenges over the years has been convincing customers that an app can be trusted to send vital medication through the post in time. This has meant the market needs to be created as much as competed for. A closer brand association with LloydsPharmacy (which along with a significant offline presence also has its own tentative online pharmacy), could help with this.

There may well be opportunities to drive Echo customers to LloydsPharmacy stores, too. This could include a click and collect scenario for customers who are nervous about delivery or for other services that can only be conducted face to face, such as basic tests, advice or things like quit smoking coaching.

Catherine McDermott, chief digital officer at McKesson UK, comments in a statement: “We know that our customers are always looking for ways to make their lives easier by managing more things online. That’s why growing our digital capabilities is one of our top priorities. Our goal is to develop innovative technologies that enable us to better serve our customers and patients by providing them with added choice and convenience”.

Interesting