This Indonesian start-up has become the Gates Foundation’s first health care tech investment
- Halodoc runs a platform used by about 40 million people to connect with more than 22,000 licensed doctors in Indonesia
- The firm, valued at about US$350 million, plans to expand its coverage to 100 million people by 2020
Jonathan Sudharta was a brawl-prone, unremarkable student who played in a rock band. Friends of his father, a self-made tycoon, feared he would one day take over the family medical business and ruin it.
Instead, in 2016, at the age of 34, Sudharta co-founded a start-up that attracted the interest of the Bill & Melinda Gates Foundation and today becomes the organisation’s first ever equity investment in an online health care platform.
His creation, Halodoc, is trying to address one of the biggest problems in medicine: In a world with too few doctors and hundreds of millions of people without proper access to clinics, how can people get the diagnosis and drugs they need quickly and cheaply?
Microsoft Corp’s co-founder has invested heavily to fight specific diseases, including a pledge of US$1 billion to end malaria. Yet the challenge for much of the developing world is how to get health care day to day, not just for a single illness.
About 40 million people use Halodoc’s app or website to connect with more than 22,000 licensed doctors in Indonesia for an online consultation. Sudharta said in an interview he is aiming to expand that by 2020 to 100 million people – more than one in three Indonesians. Once they have a diagnosis, patients can buy medicine through the app from one of more than 1,000 pharmacies and get it speedily delivered by motorcycle or scooter.
Halodoc, valued at about US$350 million according to people familiar with its accounts, also offers home blood and urine tests by a visiting medical attendant, with the result sent via the app. Patients can use the website if needed to book face-to-face appointments with a doctor at a hospital.
Few places could get more benefit from a new mobile-based health care system than Indonesia. With a population of 260 million spread across more than 17,000 islands, it has only two physicians for every 10,000 people, behind the 8 in India, and 26 in the United States, according to the World Bank.
Despite efforts by the government, infrastructure and services remain largely overwhelmed, with traffic snarls in major cities like Jakarta and public facilities often operating beyond capacity. People can make a living by queuing for others.
A 20-minute drive from Halodoc’s offices, in the Apotik Mahakam pharmacy, customers are either elderly or deliverymen waiting to whisk orders on scooters through the narrow alleys and clogged arteries of the capital. Even with peak-hour traffic crawling at an average 6.2 miles an hour, Halodoc customers can get their pills in a little over half an hour.
In the nerve centre of the Halodoc operation in central Jakarta one morning this month, some 400 young employees worked in the kind of featureless, chaotic, laptop-filled rooms that are the hallmark of a tech start-up.
Men in T-shirts and women in headscarves tapped away at keyboards, surrounded by piles of cardboard boxes, medicine delivery bags, flip charts and stacks of bubble-wrapped chairs that were awaiting a move to larger premises. Below a giant pin board of staff photos, an unused ping-pong table presented a plateful of snacks.
In the next room, half a dozen doctors in white coats sat round a table diagnosing the populace via laptops and smartphones.
The face of a young man with round spectacles and a scar on his right cheek appeared on the smartphone of Dr Alia Kusuma, one of the front line general practitioners. He had fallen from his motorcycle a month ago and was worried about the lasting effect. After a short consultation, Kusuma referred him to a laser treatment specialist.
Across the table, Dr Devi Anneta was following up on the progress of a 51-year-old man who had been hospitalised for high cholesterol, hypertension and joint problems.
Halodoc covers the cost of the medical advice from its capital and from commissions on drug sales, lab tests and hospital referrals. A prominent, crossed-out label on the app shows that it will eventually charge upwards of 20,000 rupiah (US$1.40) per consultation.
Halodoc’s rise reflects the pace of change in Indonesia, the world’s fastest-growing internet economy. Sudharta’s father founded a pharmaceutical materials trading house in 1975 that is now called Mensa Group and has businesses from making drug ingredients to supplying medical equipment to hospitals. The conglomerate gave the young Sudharta connections to doctors, hospitals and pharmacies, and contacts at the health regulator with whom he could discuss new ideas.
While his father’s company did not fund Halodoc directly, the start-up rents offices in one of Mensa’s buildings.
One of Sudharta’s early encounters with medical care was at 13, when he and some school friends got into a fight with kids at a senior school and were beaten mercilessly. The pugilistic boy was sent to the prestigious Hale School in Perth, Australia, before studying commerce at Curtin University, filling the time by playing bass in a band and producing films and concerts for Indonesian diaspora.
Back in Indonesia he joined his father’s firm as a trainee, and was sent on his first day to the port with a stack of cash. His job was to hand out a 1,000 rupiah note bonus (about 10 US cents) to each worker carrying a load of shipment.
He was upset to see an elderly worker carrying a heavy load, and wanted to give him 5,000 rupiah, but the manager stopped him, saying his action would be detrimental for the company. When the old man wholeheartedly thanked him for the tiny tip, Sudharta realised how privileged he was. He vowed never to take it for granted again.
“It was a big slap in my face,” Sudharta, now 37, said in a conference room with a broken red sofa in Halodoc’s offices in Jakarta. “That changed my life.”
He went to see Ferry Soetikno, a successful second-generation scion who had expanded his family’s health care business, PT Dexa Medica. Soetikno, 12 years his senior, told him: focus, start from the beginning and always measure your performance.
Go-Jek CEO Nadiem Makarim sees success from trusting the numbers, hyper-experimenting and luck
Sudharta adopted the pseudonym Budi Jonathan to hide his identity and began as a junior medical representative at Mensa, often waiting until past midnight for a chance to pitch drugs to overworked doctors. Over the next 13 years, he rose through the company ranks.
He did not think of starting his own medical business, but would talk to friends about the gaps he saw in Indonesia’s system. One of those friends, Go-Jek co-founder Nadiem Makarim, pulled him aside one day and said: “Why don’t you do it yourself? A start-up. Raise funds. Do it properly.”
Go-Jek, Indonesia’s answer to Uber Technologies, went on to become the country’s most valuable start-up, with ride-hailing, food delivery and payments services across the country and now spreading elsewhere in Southeast Asia. It also became a key strategic backer for Halodoc, integrating the app in 2017 into its platform.
Makarim’s advice was to focus on helping people where they felt the greatest pain, and Sudharta thought of the countless times he had seen patients camped out in hospitals to see a doctor for a few minutes and then wait another two hours to get medicine.
A year after Halodoc started, Sudharta had another pivotal introduction when he was part of a group of young leaders invited to a lunch with Bill Gates in Seattle. The invitees were asked to dress formally. Sudharta arrived in a business shirt, but removed it just before the meeting with Gates to reveal a red T-shirt emblazoned with Halodoc’s logo.
Sudharta left the meeting with the message that if you are lucky enough to be able to change the world, do good, stay on course and do not get distracted by the financial rewards.
Meanwhile, the Gates’ foundation, which distributes billions of dollars in grants to improve living conditions in developing countries, had been increasingly looking to make direct investments in companies that could help advance its goals. One of its target countries was Indonesia and the investment arm zeroed in on Halodoc.
The foundation is joining Halodoc’s so-called extended Series B round of funding with other new contributors Prudential and Allianz. They will add to the US$65 million Halodoc secured from UOB Venture Management, Singtel Innov8 and Korea Investment Partners in March.
Halodoc is only one of dozens of health tech start-ups developing apps. Go-Jek rival Grab has a joint venture with China’s Ping An Good Doctor to provide online services in Southeast Asia, while Indonesian rivals include Alodoktor.
What helps Halodoc stand out is the breadth of Sudharta’s vision to cover all aspects of the patient’s experience, all wrapped together with digital payment, said Shane Chesson, founding partner at Singapore-based Openspace Ventures and an early backer of Halodoc.
“In rapid time, Halodoc has moved to be one of the best at product development in Indonesia,” he said.
For the Gates Foundation, Halodoc is part of its belief that technology can improve access to quality health care for low-income groups, said the strategic investment fund’s Rossow.
“Whether it’s a midwife on a remote island or a pharmacy in a major city or a hospital system, Halodoc’s approach of closing that online-to-offline loop is rare,” he said. “There is huge opportunity for Indonesia to lead the world with some of these innovations.”
