The market for complementary and alternative medicine -- a wide-ranging area that includes practice-based work like yoga as well as a huge range of supplements and everything in between -- has been on a massive upswing , with the global industry valued at $82.3 billion in 2020 and growing at a fast clip in the years ahead.
Now, a company called Fullscript, which has built a wholesale backend and storefront builder to power the supplements businesses of alternative health practitioners providing these services, is getting a big infusion of cash to meet the opportunity. The Ottawa, Canada-based company has raised $240 million, funding that it will be using to continue expanding its business across North America, and developing more tools to serve its customers: practitioners building complementary and integrative treatment plans (bringing together both traditional and modern approaches) for their patients.
"We believe integrated medicine will be medicine in the future," Fullscript co-founder and CEO Kyle Braatz said in an interview. "Sixty percent practitioners are already focusing on wellness and prevention. It's more than just pharmaceuticals, and patients are doing more than just popping a pill." The company today offers a stock of some 20,000 products from some 300 brands and has some 30,000 practitioners -- medical doctors, naturopaths, osteopaths, and other therapists -- subscribing to its platform.
The investment is coming from HGGC and Snapdragon Capital Partners -- respectively a mid-market firm more known for private equity investments and a firm that invests in primarily health and wellness businesses. Fullscript's valuation is not being disclosed, but for some context, the company has been around since 2012 and had only raised about $25 million previously, growing largely by being bootstrapped. And one reason that it will have come to investors' attention now is its financial track record on its own steam: it's going to make $300 million in revenue this coming fiscal year, growing from a mere $40 million five years ago.
Fullscript is based in the same city as Shopify, and Braatz likened a little of what his company does in its own B2B2C model to what Shopify has achieved in the world of e-commerce.
Just as the latter has provided an easy way for companies selling online to build and operate their own web-based storefronts (a business that has been huge, and seen Shopify extending into a lot of adjacent areas as a result), Fullscript is addressing the needs of practitioners online.
Among Fullscript's services, it helps them source supplements; set up and fulfill prescriptions for those treatments from Fullscript's dispensary, either to pick up in their offices or have delivered to their homes; manage their patients' bigger treatment plans through an integrated approach that brings data from these treatments into a patient's wider electronic health records; and provide supplementary reading and other educational materials about the supplements that are being dispensed.
"Just as Shopify empowers merchants, we empower practitioners," Braatz said. And just as Shopify has brought a number of different tools online for its merchant customers to build out their businesses on the Shopify platform, so too is Fullscript developing more technology to grow its proposition. That will include more analytics for its customers, more tools for patients to monitor their own progress and purchases, and so on.
Fullscript's rise comes amid a much bigger push for online health services, and specifically those geared at selling medicines and supplements. That means more potential competition from Amazons of this world (Amazon being already a major destination for vitamins and other supplements), and more attention being paid to others like Ro trying to make headway in this space. But also a greater acceptance and understanding that the online component of this business is here to stay.
But it's not all smooth sailing. Complementary therapies have been a mixed bag when it comes to general acceptance and usage of them.
On one side, consumers, and a widening pool of traditional and modern practitioners are increasingly looking at these alongside the pharmaceutical approach. But on the other, there are a few reason why that hasn't been more mainstream. For starters, insurance companies do not always provide coverage for these treatments as they do for the more standard medical treatments. One of the reasons for this is that, for better or worse, pharmaceutical approaches are trialled, tested, approved by regulators and generally entered into a realm of acceptance that makes it more likely that an insurance company (or practitioner) will opt for those treatments. The same has not been the case for supplementary medicines, not least because some of the effects might be harder to quantify. And partly because of that, or even from direct experience, there are plenty of reputable skeptics when it comes to those effects.
Insurance is not part of the backend for the moment for Fullscript, and all of the payments for products are made by patients directly themselves.
In the defense of integrative approaches, however, there are plenty of reasons why consumers and the medical industry might also criticize the pharmaceutical approach, too (not least because it's not 100% foolproof, the costs, the side effects and so on). Indeed, Braatz noted that attitudes towards integrative approaches are gradually starting to change, not least because of the many reasons that conventional approaches do not work perfectly.
"I think the whole integrative market is just starting to leverage insurance," he said. "Practitioners starting to be compensated because compensation is evolving from volume to value-based. And we see hospital systems starting to build and acquire integrative clinics to keep patients out of hospital systems."
That evolution, in effect, is as much a part of the investment strategy here as the current business is.
"We are long term believers in the Fullscript story, and we thought that its platform, the tech they developed, and the reviews of that we've seen of it from the industry, would be an exciting investment. There is a ton of potential," said Bill Conrad of HGGC.