At first glance, TJ Parker looks a bit more like the guy who you might buy pot from at a Dead concert than the person you’d seek out to purchase your prescription meds.
On Tuesday morning, the sandy-maned 29-year-old pharmacist was wearing a chambray shirt and jeans, desert boots, and an Apple Watch in the Davis Square headquarters of his two-year-old startup, PillPack, an online pharmacy that provides personalized, pre-filled, single-serve packs of pills to its customers that are organized by date and time. But this atypical drug dealer is now in possession of some kingpin-level cash. On Wednesday, the company said that it raised a $50 million fund-raising round led by the Cambridge and San Francisco-based venture capital firm CRV and others including Accel Partners, Atlas Venture, Menlo Ventures, and Sherpa Ventures.
“We think it’s a huge market and a chance to modernize the entire pharmacy,” said George Zachary, a partner at CRV in San Francisco who will join PillPack’s board. Zachary said CRV committed $30 million — one of its largest investments to date — because of Parker’s experience and his vision. “He’s an authentic founder … He knew that from being in it that it could be way better.”
Parker is second-generation pharmacist who grew up behind the counter of his father’s mom-and-pop drug store in Concord, N.H. Whenever he went out to deliver prescriptions, he grew frustrated watching as customers used Excel spreadsheets and day-of-the-week pill containers to keep track of their medications. So he color coded their pill bottle caps or wrote out the names of the drugs in huge letters — anything he could do to help them.
“I got very fascinated with why this experience was so bad,” he said.
And it’s not only bad, it can also be dangerous. According to the Centers for Disease Control and Prevention, 10 percent of the US population, or 32 million people, are prescribed five or more medications each month. But getting them to actually take those prescriptions correctly and routinely is a challenge.
“The other drug problem in this country is adherence,” said Joseph Ferullo, an associate professor of pharmacy practice at Massachusetts College of Pharmacy and Health Sciences in Boston. The Network for Excellence in Health Innovation has determined that Americans spend $290 billion annually on health care because of their inability or unwillingness to adhere to their prescribed care plans.
Parker studied pharmacology at MCPHS, but often found himself dipping into design classes across the street at Massachusetts College of Art and Design. He first started to merge his interests around 2010, when he signed up for the pharmacy school’s annual business plan competition. At the time, Parker’s father had started a company delivering pre-filled pill packages to nursing homes throughout New Hampshire. Parker wondered whether he could replicate the concept for a retail consumer.
“TJ found a gap in the marketplace,” said Ferullo, who oversaw the contest where Parker first pitched his concept. “He took something that was already being done with nursing home and long-term-care facilities groups to the general public and that’s where the game changing began.”
After the contest, Parker volunteered to help organize MIT’s annual 100K entrepreneurship challenge, where he met his co-founder, Elliott Cohen, who was attending the university’s Sloan School of Business and had just started a hackathon series called Hacking Medicine, which brought together Boston’s academic and hospital communities to find new ways to rethink the delivery of heath care.
Cohen had witnessed his own pharmaceutical frustrations while growing up: His mother ran a group of community clinics near his home in Davis, Calif., and his father suffered through two heart attacks and two rounds of cancer. After finishing school in 2012, Parker persuaded Cohen to launch the company. A string of successes quickly followed as the team was accepted to the TechStars accelerator that fall, then partnered with the IDEO design firm to prototype their products. At the outset of 2013, they raised over $3.5 million in the span of just a few months.
The company has now accumulated $62.5 million, and employs more than 60 people between its offices in Somerville and Manchester, N.H. (Parker’s father now works for him as the vice president of pharmacy.) Parker won’t disclose the company’s valuation or the size of its customer base, but said it has distributed over a million individual dose packets since launching the service in February of last year, and are now licensed to serve 47 states.
Customers logging onto PillPack’s website can provide the company with their prescription information in a matter of minutes. The PillPack team then navigates the complicated process of coordinating with insurance companies to coordinate the delivery of meds. “Frankly, putting the pills in the right pack is the easy part,” Parker says. “It’s all the stuff around it that makes it really complicated.”
Forbes has estimated that the company would make $15 million in revenue this year.
The new round of funding, Parker said, would provide the company with the opportunity to expand its client base and establish a brick-and-mortar footprint. The company has plans to open storefronts later this year to promote the PillPack brand, using a model similar to other online retailers Warby Parker and Bonobos. He also said that they’ll launch a PillPack mobile app in the coming months, and anticipates it will have features that connect users directly with pharmacists.
“Our vision has always been to replace retail,” said Cohen. “This gives us the capital to do that at scale.”
“We should probably hire a finance guy,” Parker joked. “That would be smart.”
Janelle Nanos can be reached at email@example.com. Follow her on Twitter @janellenanos.
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