BY ShivaharshM

1mg Business Model – Prescription deliverer & much more! 

1mg Featured Image

Quick Introduction : Read about 1mg’s Business Model which started as a repository of drug information as HealthkartPlus and then evolving into one of the key players in online pharmacy space.

A decade back, the strong nexus between some doctors and chemists had made it impossible for you or me to even think of receiving a discount on medicines. What made matters worse was that it was the patient, again you and me, fueling this nexus but not an iota of benefit was passed on. But then tables began turning in 2013 when 1mg, an online medicine marketplace which serves as a single window for various kinds of medicines offered drugs at discounted rates via a mobile application and a website. 1mg was founded by Prashant Tandon, Gaurav Agarwal, and Vikas Chauhan. More on this troika later. For now let’s focus on 1mg’s Business model, its history and revenue model.

Unknown to several, 1mg was started as HealthkartPlus as a generic drug information dispenser under Healthkart.com but later in 2015 the latter not only separated the drug business but also re-branded it to 1mg Technologies Pvt. Ltd.

Here’s a screenshot of the site from 2014.

However, the platform’s success also commemorated the users requesting home delivery of medicines which formed the genesis of 1mg. 

Cut to present day, 1mg’s revenue reportedly have increased by 158% to INR 49 crores in FY20 compared to INR 19 crores in FY19 despite facing competition from similar entities such as NetMeds (Reliance owned) and PharmEasy, and with established brands playing in the online space: Apollo and Himalaya. 

Now since we have added a number to 1mg’s successful growth, let us focus only on how and why it has grown in the last 7 years? 

Decoding 1mg and its marketing journey 

In 2013, the service which 1mg was offering could not be termed as innovative, as by then clothes, shoes, food, and groceries were being shopped online by a large growing base of time-pressed users. But, within the medicine delivery space, 1mg did have a unique proposition and faced two major challenges; one was to maintain an inventory of all medicines and the other to manage the cost of the medicines. Once these challenges were managed, the concept only grew and attracted investment for wider operations and improved technology.

And soon, the app found high levels of acceptance among the urban population in metro cities such as Delhi, Pune, Mumbai, Bengaluru, Kolkata, Hyderabad, Ahmedabad, Chennai, and other key cities such as Lucknow, Indore, Chandigarh, and Jaipur. Today with more than 5 million app downloads and 3 million monthly visitors, 1mg has indeed travelled a long way since the year 2013. 

But one should be asking here – what exactly does 1mg do to have achieved this kind of growth? 

Phenomenal Organic Growth ! .

The uniqueness of 1mg is their heavy dependence on content as they have learnt early on that Content as a key strategic acquirer of customers. Since the outset 1mg has been heavily invested in content generation and have strived to put out relevant content and engage an actively searching patient community around content. And the content generation and engagement effort were a continuous exercise which led to potential customers lingering on at the portal and then later when 1mg made the transition towards delivery, the customer acquisition cost was justifiably low.

1mg - WebsiteTraffic Statistics- Ahrefs

Ahrefs

1mg - WebsiteTraffic Statistics-Similarweb

Similarweb

Rightfully so, 1mg has a team of 40+ content writers, mainly comprising doctors and pharmacists hence no puff and that’s why lots of trust. Read about the popular “Medic Update” here.

what is google medic update.

 

1mg - Content Editiorial Team - Displaying Medical Expertise

1mg’s Core Business Operation aka revenue streams 

1mg’s business model very crudely can be termed as similar to Swiggy. Let me explain their order fulfillment process. 

Once a patient / customer / caregiver places an order for medicines on 1mg’s app, a representative visit one of the nearby pharmacies. Remember, 1mg has already partnered with licensed pharmacies from across the country and hence managed one of its first challenges of inventory management. The medicines are picked up by the representative and then home delivered. 

Subsequently buoyed by the response of customers towards allopathic drugs, 1mg also focused on delivering homeopathic and ayurvedic medicines to its kitty. 

Today 1mg has evolved further from solely delivering medicines to much more such as the following as sources of steady revenue. 

  • Lab and diagnostic tests

    One of 1mg’s hit and highest revenue generating service is facilitating lab and diagnostic tests. Upon ordering a test, a 1mg representative visits one’s home to collect the sample for an additional fee. Post which, the samples are sent to the many accredited labs partnered with 

  • Doctor consultation

    From honoring prescriptions to generating prescriptions, 1mg moved up the value chain by connecting patients to partnered doctors, like Practo under the tab, Ask Doctor. One can select the specialty of the doctor, attach the lab tests and then 1mg connects you to the doctor based on your query and then follow up with the doctor. For more clarity, read the FAQ page on 1mg

  • Healthcare Partnerships

    Not being content only with individual customers (patients), 1mg also strategically partnered with several businesses in this bit-by-the-entrepreneurial-bug market looking to offer healthcare plans to their employees. For this 1mg partnered with insurance providers to offer affordable healthcare plans to employees of the businesses. It is an ideal situation where everyone in the system wins. 

  • Subscription-based care plans

    A lifetime loyal customer is what every B2C business strives for and not surprisingly, this is what even major pharmaceutical companies aim for via doctors. For example, a migraine patient will need medicines regularly and once the patient subscribes to 1mg’s subscription plan, the benefits provide ample value to the patient such as free delivery, discounts on tests, and early discounts. In return, 1mg has recurrent business. 

  • Private labeling

    Few years after commencement of operations, most importantly after gathering enough customer purchase insights and building a formidable brand for themselves, 1mg started selling products under the “1mg brand” via Delhi Mediart Private Limited (a 2017 registered company wherein 1mg’s CFO and COO are directors of. (attach screenshot)  1mg’s website lists 59 products under their brand ranging from protective face masks to curcumin (turmeric) capsules. Since the pricing is controlled in-house, there are lucrative offers on these products. Below are the insane amount of products that are being sold under the 1mg brand.Products associated with Delhi Mediart Private Limited

  • Ads on 1mg website and application

    With 1mg claiming to have more than 150 million visitors, it provides the ideal platform for corporate branding ad banners by healthcare brands. 

1mg Co-Founders 

Prashant Tandon is IIT-Delhi and Stanford University grad and has worked with McKinsey, Hindustan Lever and MapMyIndia before going on to co-found 1mg.

Gaurav Agarwal, the second founder of 1mg, is also an IIT-Delhi grad and had worked with Farmville- Zynga, and Netapp prior to 1mg. 

Vikas Chauhan graduated from Somaiya college and interestingly is also the founder of Fresh ‘n’ Daily, a marketplace for home delivery of everyday home products just like BigBasket.

1mg Co-Founders

Image Source – Yourstory 

1mg Funding

According to Crunchbase, 1mg has received 15 rounds of funding totaling to a sum of USD 191.3Mn from the likes of Bill & Melinda Gates foundation, Sequoia Capital India, HBM Healthcare Investments, Maverick Ventures, Innoven Capital, Redwood Global Healthcare Fund, etc. 

Future plans 

1mg has always focused on continued innovation and thus providing ample technological value to their users with a slew of digital health tools such as medicine reminders, digital health records, etc. A proof of this continuous innovation lies in the pudding pool of funding. 

Besides focusing on expanding their operations across the country, working on newer business models such as OPD Insurance, co-creating patient support programmes with pharmaceutical companies, and building the necessary logistical network and infrastructure, 1mg is also focusing on taming their already existing huge patient database with AI and ML for newer products such as Digital Doctor and AI-powered bots to provide world-class healthcare with the patient at the center. 

Concluding thoughts

Until 2019, as entities e-pharmacies operated in a grey environment as there were no laws to govern this much-needed form of delivery of drugs. However, post COVID-19, things shifted to fifth gear and reports suggested a 2.5x increase in households utilizing the e-pharmacies’ facilities. The number of households adopting e-pharmacies is only expected to swell to 70 million by the year 2025. Based on the potential held by India and the continuous innovation approach, 1mg is well-poised on a growth path.

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Shivaharsh Murugan
Shivaharsh Murugan

A company secretary and lawyer-turned SEO geek and also someone who thinks he is deeply passionate about startups.

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