Daniel Lee knew he could count on his father's support when he left the family business to go it alone in 1999 after all, they were both pharmacists. But his father "was also rather relieved", reckons 38-year-old Lee. "He was looking to retire and didn't want to risk the capital he'd built up over 40 years," in his chain of chemist shops across East Leeds. "And here was me pushing the boundaries, at one stage trying to buy a chain of 12 when we only had four. So you can understand his concern."
Lee's 'eureka' moment came in 1997. The NHS was looking for better ways to deliver prescriptions to patients. "That's when I came across the internet mail-order model." Established in the US for more than 25 years, mail-order firms such as Medco and Drugstore.com were cleaning up as they moved online, with about 15% of the prescription market. In Britain, the 1968 Medicines Act made it illegal to sell drugs by post. But Lee was convinced the law was outdated.
After taking legal advice, in 1999 Lee sold his flat and ploughed £100,000 into developing a website, Pharmacy2u.co.uk. After tracking down wholesalers from among his father's contacts, he looked at launching a mail-order business from the back of a pharmacy in Leeds. It wasn't all plain sailing. "Hosting a web server was £30,000-£40,000 a month in those days", compared with about £300 today. "There was no way we could afford that." So in exchange for 5% equity in the business, an internet service provider agreed to host their website free of charge for a year.
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After five months of development, the site went live in November 1999. Just two days later, "the Royal Pharmaceutical Society descended on us to come and inspect and shut us down". But Lee's procedures and guidelines were watertight. The firm was run just like any other high-street pharmacy, with the drugs sent through a courier service, in which Lee had taken a 51% stake. This, the Royal Society ruled, was one step safer than using the Royal Mail, and they gave him a licence.
Unsurprisingly, the innovative start-up garnered a lot of press, and by 2001 sales had hit £0.5m a year. But to grow further, Lee knew he'd have to expand on its best-selling 'pharmacy-only products' over-the-counter medicines, such as strong painkillers and move into the prescription market. In 2002, the site won an NHS contract for a pilot scheme developing electronic prescriptions through GP surgeries. "That's really where the business has moved to." People with chronic illnesses who need repeat prescriptions can reorder online through 200 surgeries across the country. Lee plans to be in 6,000 surgeries by 2010. Sales hit the £12m mark this year, and the business has been profitable since 2005.
So does Lee miss being involved in a family business? "There are pros and cons. In a family business, you are the master of your own destiny. But with this, I can call on outside experts to make collective decisions and discuss strategy. And that's great."
