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If you are looking for a great business idea, it is advisable to ask the people closest to the problems that need to be fixed. In Josh Stein’s case, this meant going to his parents.
Mr Stein, the son of a doctor and an occupational therapist, had caught the start-up bug working for a clutch of New York-based online delivery services and he was soon yearning to be an entrepreneur in his own right.
He reasoned that medicine was a market large enough to generate a major win given the right product or service, but since none of his previous employers operated in this market he turned to his parents for advice.
“They both mentioned the trouble they faced getting people to take their medication,” Mr Stein recalls. “Then said it would be real neat if there was a timer on the med bottle that could tell [patients] when to take a pill.”
It was the inspiration he needed for his company AdhereTech, which he set up to make smart pill bottles, a mass market product built with sensors and a wireless chip that track patient usage and alert them if they miss a dosage.
Failure to take prescribed medicine costs the US healthcare system $300bn each year, including $100bn in lost revenues, and results in 125,000 premature deaths, Mr Stein notes. “Technology use has expanded into all facets of modern life but the healthcare industry has tended to be slower to adopt it,” he says.
AdhereTech was launched while Mr Stein was completing the MBA programme at the University of Pennsylvania’s Wharton School. He removed himself from New York’s buzzing start-up scene to start the course in 2010.
Support came both in terms of resources and teaching as the school runs an incubator and other schemes to nurture early-stage ventures. “Lots of the students were pursuing entrepreneurial ventures so you got to pick the brains of good people,” Mr Stein recalls. It also helped that Wharton is among the top US schools for healthcare.
Among the teaching staff, Mr Stein picks out Adam Grant, one of the school’s youngest tenured professors. “He helped me negotiate a patent agreement that is one of the cores of our business,” Mr Stein explains.
Putting intelligence into everyday objects, as AdhereTech has done, is widely regarded in Silicon Valley as the next big evolution of online technology. By compiling usage information, which Mr Stein stresses is anonymised and compliant with data protection rules, AdhereTech has also become a data-driven business with valuable information otherwise unavailable to its clients.
AdhereTech’s customers include several of the largest US pharmaceutical companies, a national pharmacy chain, and both New York and Boston’s health system operators.
Although reluctant to talk detail about the company’s profit and loss account, Mr Stein claims that annual revenues will pass the million-dollar mark next year. The company has raised $2.4m in two funding rounds, the most recent of which was $1.8m in July 2014, and Mr Stein says there are no immediate plans to add to this pot.
After graduation from Wharton, Mr Stein returned to New York. “I love this city [and] that definitely played into the decision, but the healthcare technology scene here is incredible,” Mr Stein says.
He gained a place on Blueprint Health, a New York-based accelerator programme focused on helping early-stage healthcare businesses. It was here Mr Stein and his team built a working prototype and lined up trials.
The next few months will see the rollout of a second version of its smart pill bottle with a longer battery life, a wireless chip that can work outside North America and, in Mr Stein’s words, “looks more like a normal bottle”.