Cabinet launched across the country with Target unique packaging on end-cap and in-aisle across ... [+]
Cabinet Health is on a mission to reduce single-use plastic from healthcare. In just a few short years, they have found like-minded partners in major companies such as Target, CVS and McKesson. I sat down with Co-Founder and President Russell Gong to discuss the origins of the company and Cabinet Health's commitment to pioneering the next generation of sustainable healthcare products and services.
Dave Knox - Let's kick off by delving into what Cabinet Health is all about.
Russell Gong - Cabinet Health is a sustainable healthcare company on a mission to eliminate single-use plastic from medicine. Our purpose is to lead the next generation healthcare through sustainable healthcare products and services.
Knox - What motivated the choice to make eliminating single-use plastic from medicine the central mission of Cabinet Health?
Gong - My background lies in sustainable product development, and I'm a US Army veteran. Beginning my career in local policy, I witnessed the environmental and community challenges that inspired my focus on sustainability. Transitioning into consulting, I gained insights into how brands could create scalable and sustainable products. Combining these experiences, I aimed to address a broader issue.
My co-founder, Achal Patel, brings a unique perspective as a third-generation pharmaceutical entrepreneur. His extensive experience in the medical supply chains, including his family building one of the first acetaminophen factories in India, became the backbone of our company. The formation of Cabinet involved combining my decade-long experience in sustainable product development with Achal's three generations of pharmaceutical expertise. We envisioned a company that harmoniously integrates healthcare and sustainability.
Beyond our personal backgrounds, when we consider the macro issues at play, the intersection of healthcare and sustainability is critical. Plastic waste is a healthcare problem and the healthcare industry has made minimal progress in addressing the plastic and climate crisis. Cabinet Health was established with the mission to tackle this pressing issue.
Knox - As you identified the problem you aimed to solve, particularly the prevalence of single-use plastic in medicine, what were the major obstacles hindering the integration of sustainability into the healthcare industry historically?
Gong - Understanding the problem sheds light on the challenges preventing meaningful progress. To illustrate, consider the staggering numbers: approximately 194 billion single-use plastic medicine bottles are produced annually, with over 95% of them going unrecycled. The majority end up in oceans, landfills, and incinerators, contributing to environmental problems, including climate change acceleration and ocean pollution. However, this plastic crisis extends beyond the environmental realm.
Consumption of microplastics has become a concerning reality. People are ingesting the equivalent of a credit card's worth of microplastics weekly. Recent discoveries show the presence of microplastics in our bloodstream, lungs, and the breast milk of young mothers. Medical researchers claim that with microplastics in carotid plaque can 4-5x people’s chances of having a cardiac event.
We started Cabinet to make the simple, yet proud recognition that, “Plastic waste is a healthcare problem, therefore the healthcare industry needs to play a role in solving it.”
Now, addressing the question of why sustainable practices haven't been adopted in the healthcare industry, there are two key factors. Firstly, awareness of the problem has been lacking. While discussions on plastic waste and climate often involve items like water bottles, cars, and clothing, the connection to medicine bottles has been overlooked. This awareness gap is a fundamental reason why Cabinet Health sees itself not just as a business but as a brand with a mission to educate.
Secondly, the sheer size of the healthcare industry and its complex supply chains poses a challenge. Implementing change in such vast and intricate systems requires a shift in mindset. Instead of viewing the healthcare industry as an impersonal entity, we recognize it as a network of families–just like Achal’s family. This perspective drives our approach: understanding how each part of the value chain views innovation as well as social progress and translating solutions accordingly.
However, affecting change demands significant determination in business models, aspects that have been challenging for large healthcare companies, pharmaceuticals, and pharmacies.
In essence, the barriers revolve around a lack of awareness and, to a great extent, the courage to innovate. Cabinet Health emerges as a response to these challenges, aiming to create awareness and infuse innovation into the healthcare industry.
Knox - Considering the broader mission of Cabinet Health, where did you begin and how has your go-to-market strategy evolved?
Gong - Our go-to-market strategy is simple: prioritize patients and planet. Follow the impact.
With this approach in mind we started with everyday essentials and over-the-counter (OTC) medicines online. These are products that over 90% of consumers take every day and that hold space in a variety of life moments. Building a brand at that start serves as a showroom for sustainable healthcare and demonstrates new customer behaviors for legacy products we’ve known all our lives.
After building a brand, we moved towards access and focused where most consumers currently buy their OTCs – physical retail and pharmacy. The OTC aisle is uninspiring and filled with single-use plastic. Our retail and pharmacy partnerships marked a significant milestone, not just for us in distribution expansion but for the industry more broadly by transforming the entire over-the-counter category.
Our partnership with Target brings the story of category innovation to full life. Prior to the launch, we worked hand-in-hand with Target category buyers and marketing teams to create a unique Target Guest experience. Target and its OTC leadership is truly passionate about design, quality, sustainability at the most affordable price. The outcome of the partnership is Cabinet launched across the country with Target unique packaging on end-cap and in-aisle across allergy, pain, digestive, and cold & flu. Within just the first months of launch, Target helped reduce tens of thousands of pounds of plastic from entering the environment and demonstrated to Guests a better option that saves them money, with organizational delight. This spring, Cabinet and Target launched a national campaign called the Spring Sustainable Swap Tour – that energizes customers to buy at Target as well as local artists and activists to encourage sustainable swaps in daily routines.
Knox - You mentioned you “started” with over-the-counter medicines. Can you share more of your product roadmap and especially your work between OTC versus Rx channels?
Our sustainable healthcare product vision extends far beyond what is available today. Over the next few years we plan to grow across OTCs, Rx, and medical consumables. Our company is positioned as a sustainable healthcare company – and we’re especially excited by the launch of our pharmacy and healthcare solutions capabilities earlier this year.
Starting with Rx, over 60% of Americans have an active prescription that they often take daily. That’s a lot of plastic! Cabinet Health prescriptions and pharmacy services create a highly personalized care experience that delivers refillable prescriptions in the mail conveniently and sustainability. Cabinet patients enjoy personalized pill organizers and have pharmacist access and enhanced care quality.
In terms of healthcare solutions, we recognized that in-spite of our rapid growth rates as a company our impact alone would be limited. Thus, we introduced a B2B offering called “Powered by Cabinet” which delivers healthcare solutions to larger healthcare companies in order to accelerate sustainable transitions. What “Powered by Cabinet” effectively does is share our product, packaging, and in-market insights with the whole healthcare industry for them to scale mass wide. In essence, we aspire to become a catalyst for sustainable healthcare products and services, akin to the Gore-Tex or Intel of the industry.
Our partnership with McKesson, a diversified healthcare services company, is a premier example of how I view industry leaders building for future generations and scaling sustainable healthcare innovation. In 2023, McKesson launched a curated private brand called “Foster & Thrive” that brings McKesson’s 200 years of supply chain excellence and selective sourcing underneath one label. The brand extends to thousands of local pharmacies, retailers, and healthcare systems representing multifaceted care and quality. Advancing the brand promise, this spring McKesson launched an innovative OTC aluminum product line that offers patients an infinitely recyclable and 70% less plastic product powered by Cabinet. McKesson and Cabinet’s partnership leads the charge for the entire healthcare industry and encourages more profound sustainable healthcare innovation. The Foster & Thrive aluminum product line will be available across the country and is the first of more sustainable healthcare product launches for the company in the future. Beyond product innovation, what’s been most impressive to me is the leadership and people across McKesson’s organization who focus daily on creating innovative models for patient care.
Knox - You've collaborated with major companies like Target, CVS and McKesson, all Fortune 100, perhaps even Fortune 50. How did these partnerships originate? Was it through outbound efforts, reaching out to them, or did they approach you? Can you shed light on the evolution of these collaborations?
Gong - The engagement from our various corporate partners is truly inspiring. I believe the tactical discovery process is a function of our work on our brand, investments in research and development, as well as our amazing mentor and investor network
Beyond the tactical aspects, let me emphasize the underlying motivation for their openness to working with us. These companies are genuinely focused on the wellbeing of their customer base, contemplating the future, and considering the role of sustainability and innovation in their business. This perspective has fueled meaningful B2B conversations as I shared with Target and Mckesson, challenging the common perception that large enterprises are solely profit-driven. I believe they are genuinely committed to making a positive impact.
A great example of mission-driven industry engagement is our partnership with CVS Health. When CVS first worked with Cabinet it was through an innovation program designed to nurture and support new mission-driven brands. Underneath this program, CVS leaders took us under their wing and helped us evolve our offerings and products across select stores. Further, they brought me and my team into training courses like supplier diversity training and retail strategy summits. Their programmatic commitment to our company really helped us apply our sustainability innovations to a massive operation like CVS. During those forums, we also learn more about the amazing work their ESG team leads. On a personal level, through these experiences I also created wonderful professional friendships and mentorship relationships for me as a co-founder.
Looking forward, CVS has bold sustainable healthcare goals and one of which is to reduce single-use plastic in their store brand portfolio by 2030. Cabinet Health is proud to partner with the organization which continues to be a prominent pharmacy partner.
Knox - In the realm of direct-to-consumer businesses, where you initially started, simplicity often reigns, especially in industries like shampoo or sneakers. However, you're operating in a highly regulated space, both on the Rx and OTC sides. What challenges has this regulatory environment presented, and as you anticipate growth, what regulatory obstacles must be navigated to uphold your sustainability mission?
Gong - When considering the policy landscape, we consistently factor in various favorable and challenging aspects. Of course, there are the tailwinds of sustainability and plastic regulation. As consumers, the academic community, and regulators increasingly recognize the issues surrounding plastic waste, we observe a surge in U.S. laws either prohibiting specific single-use plastic products or imposing extended producer responsibility, fostering continuous innovation. This regulatory push is a positive force for us, allowing us to proactively gain market share and stay ahead of impending laws. This becomes even more pronounced in international markets, where such regulations are more aggressive.
The second focus area revolves around maintaining quality while prioritizing sustainability. My vision is that sustainability should be inherent, not a choice, particularly in healthcare and medicine. Whether adhering to FDA regulations or conducting rigorous stability testing for every packaging format and molecule at varied temperatures, ensuring high standards is a non-negotiable part of our business. We go beyond mere compliance, investing in third-party batch level testing, stringent sourcing requirements, and exceeding FDA standards for product quality. The comfort we find in healthcare and medicine regulations stems from our thorough understanding and surpassing of these standards, allowing us to innovate confidently once the benchmarks are met.
The third regulatory aspect involves transparent communication of sustainability claims to our patients and customers. While not a significant regulatory challenge, it is crucial for us to uphold the integrity of our sustainability claims in alignment with FTC guidelines. As sustainability science evolves with changing materials and waste production, our commitment is to consistently innovate in our packaging, providing clear and honest information to avoid greenwashing. If we fall short of the perfect solution, which is a shared challenge, we openly communicate our progress to customers, seeking their support in our ongoing journey toward sustainability beyond single-use plastics.
Knox - So what do you have in store over the next 10 years of Cabinet? Where do you hope the business goes?
Gong - Our team remains unwavering in our commitment to realizing the mission of eliminating single-use plastic in medicine and fostering more sustainable healthcare products. As we envision the future of the business, our focus revolves around expanding in three core areas.
Firstly, we aim to deepen our collaboration in over-the-counter medicines and everyday essentials through partnerships, such as the one with Target, CVS and others. This entails not only growing our presence but also enhancing the sustainability of other healthcare products.
Secondly, we see significant growth in our pharmacy and patient experiences. The demand extends beyond personalized and refillable prescriptions to encompass a broader spectrum of sustainable healthcare experiences. This includes interactions with our pharmacy team and access to various healthcare products like inhalers and tests. We're eager to cater to these evolving needs.
The third area of growth involves expanding our B2B partnerships, aligning with industry leaders and giants to expedite the transformation of the healthcare industry. Our collaboration with McKesson exemplifies this, and we are enthusiastic about leading the charge in transforming the entire U.S. healthcare system towards greater sustainability.
I have an incredible team of sustainability specialists that work unbelievably hard to gain traction in our mission. I’m proud of every day that they fight for our mission – it’s not an easy one – but our team won’t stop until sustainable healthcare is available in every single medicine cabinet, pharmacy aisle and hospital.
