There is a lot that is tricky about selling medicines online. Still investors lined up to back these companies. Tracxn data shows $90 million was invested in this sector since 2015. In its previous life, 1MG was called HealthKartPlus or Bright Lifecare Pvt Ltd. And in April 2015, HealthKartPlus was spun away into a separate entity as 1MG, an online marketplace for medicines, to facilitate doctor appointments and book diagnostic tests. It has got over $22 million in funding, helping it take the fight to Practo.
1MG Technologies Pvt Ltd previously Bright Lifecare Pvt Ltd
as per MCA records
HBM Healthcare Investments AG
What has 1MG been up to, the last year?
The company has kept itself busy raising funds, with two rounds raised back to back—an undisclosed round just after a month it got $16 million from Maverick Capital. 1MG is expected to use the money to expand its online pharmacy that sells close to 100,000 medicines, its diagnostics vertical, and launch smart prescriptions and personalised health feeds. It also plans to expand its reach from the current 12 cities to 30 by March 2017.
Its growth plans are also reflected in its acquisition of diagnostic labs aggregator Medd, this year to beef up its diagnostic services. Regulations can make or break the sector as clarity is awaited.The Drugs and Cosmetics Act of 1940 quite obviously does not have a provision for selling medicines online, and so far it has been treated as a grey area. Worse still, bodies like All India Organisation of Chemists and Druggists have called online sales of pills illegal.
Given that Sequoia is an investor in both Practo and 1MG, both these companies will take each other head-on because let’s face it, there is an acquisition on the cards à la Roadrunnr and Tinyowl.
Rs 1.9 crore: The revenue earned by mostly selling medicines online in FY16. The company claims an average ticket size of Rs1,250 for its orders, which means 1MG does a measly 1,288 orders a month. A neighbourhood pharmacist does close to 2,500 to 4,000 a month.Go figure.
Rs 33.1 crore: The expenses of 1MG in FY16 is a fraction of what it was as a combined entity — Rs 141.4 crore — in FY15. Thanks to zero expenses towards purchases of stock in trade, the total expenses of 1MG is dramatically lesser in FY16, while as a combined entity, 70% of expenses was from stock purchases. This signals a change in business model to that of a marketplace, which could have been done for regulatory reasons or for business reasons or both.
40%: The cancellation rate seen by the start-up according to a Money Control report. The company has launched subscription services in an attempt to reverse this and hold on to consumers.