If you need an Aspirin, you need an Aspirin

Before we talk about 1mg, let’s talk about the company that it was spun out of. Healthkart. It was founded in 2011 and sold dietary supplements online. It clocked a revenue of Rs 79 crore ($12 million approximately) and a loss of Rs 72 crore ($11 million approximately) in FY16 and its investors say is on track to break even soon. But in 2015, the founders saw an opportunity in medicine delivery. And the spin-off was called 1mg.

The executive mentioned above says that there is a lot to like about e-pharmacies. It isn’t discretionary spending. “If you need an Aspirin, you need an Aspirin,” he says. And 1mg will get it for you. 1mg’s initial objective was, and remains, is to deliver cyclic medications for those who need it.

Getting rid of going to the shops

So, this is how it works. You want your hypertension medicine delivered to your doorstep. Upload, the prescription, order it. Within 24-48 hours, an executive rings your doorbell and viola. A simple logistic model with plenty of use cases. A real problem to be solved. But with every use case, there is a flip side.

There are three problems with that model.

  1. Customers can order medicines from the neighborhood pharmacy by just giving them a call
  2. Establishing trust with the customers. After all, it is medicines.
  3. Standing out in the crowd of scores of others doing the same thing
  4. Solving #2 and #3 is what has taken up most of 1mg’s bandwidth and that’s where its end state lies. Because to disrupt #1, it has to build on #2 and #3.
  5. But Practo has a headstart on these companies. Its sheer popularity when it started doctor discovery, helped it pull ahead. So, to make up for a lost time, 1mg took the acquisitions route.

“All acquisitions are done to add capabilities that we do not have in-house. Homeobuy, Mediangels, Medd, Dawailelo,” says Prashant Tandon, co-founder, and CEO, 1mg. “All four of them bring an entry point in something new. With Homeobuy platform, for example, we brought in alternative medicines, which we did not have.”

What are the acquisitions?

Homeobuy: It was an early buy. In 2015, 1mg picked up the platform, which dealt with alternative medicines, primarily homeopathy and Ayurved. A market, which was valued at Rs 3,000 crore (about $460 million) in 2015 and was set to rise to Rs 5,500 crore ($850 million approximately) by 2017. There are a lot of takers for the kind of products Homeobuy has access to. Whatever your opinion on homeopathy, it is hugely favored in India. There is also a supply problem with when it comes to these medicines, which 1mg addresses through this acquisition. And then there is Ayurved, which has recently received a further shot in the arm by the NDA government. The margins on these medicines, the company says, are high and there is a lot of cash to be made.

Mediangels: In 2016, 1mg focused on the two digital health services that come much before ordering of medicines—teleconsultation with a specialist doctor and ability to book radiology tests all through its app. By acquiring Mediangels, which had raised $1.5 million, and had created a network of 460 super-specialist doctors, 1mg entered a territory dominated by Lybrate. This feature was aimed at adding trust to 1mg’s app. It helped verify to the customers that the app had “the confidence of some big-name doctors,” says the executive quoted above. It also opened a new line of monetization through corporate wellness tie-ups for teleconsultations to bring more app users.

Medd: Similarly, 1 mg’s scope in diagnostics was limited to pathology. In simple terms, regular tests like blood or urine, where samples can be collected from home. Acquisition of Medd brought a deeper understanding of diagnostics to 1mg and it brought an ability to book trickier radiology tests like X-rays.