Why Maverick, Sequoia India injected $15m in e-pharmacy startup

Photo credit: Neil Falzon.

1mg, a startup that lets people order medicine and diagnostics online, announced a series B round of US$15 million today. The round was led by Maverick Capital Ventures and included previous investors Sequoia Capital and Omidyar Ventures. This brings its total disclosed funding to US$21 million.

The startup lets consumers look up information about medicine, find cheaper substitutes, and order what they’d like online.

The other interesting aspect of the startup is its focus on analyzing price differences across medicines and providing consumers with the most affordable option.

Founders Gaurav Agarwal and Prashant Tandon were classmates at IIT-Delhi and were startled to see the unevenness of the medical pricing market when they returned to India from working abroad.

“Even though there are 2,000 odd unique drugs available, there are 200,000 brands that sell them,” says Gaurav. “There are 80-100 brands for every medicine and huge discrepancies in the market. Our first thought to solve that was to educate the consumer better, which is why we first launched our app.”

They launched the “Wikipedia for medicine” app as an experiment, and it went viral. “People were recommending it to their friends,” reminisces Gaurav. “The real spark was when we found out that there’s a WhatsApp message that’s been spread that tells people about medicines and their substitutes and side effects. It’s in many different languages, and we realized then that we’d stumbled upon a lucrative market.”

The response that their initial release receiving convinced the two to start an end-to-end medicine delivery operation.

The problem of price effectiveness extended from everything from routine medicines obtained from pharmacies to those prescribed after lab tests. For the latter situation, 1mg has also launched a lab test analyzer that provides consumers with information about the most affordable and relevant medicine.

How it works

Photo credit: travelwayoflife.

In order to change consumer behaviors and replace offline pharmacies, 1mg is designed to be pretty easy to use. The app asks consumers to upload a prescription. If a pharmacist from the 1mg team verifies it, the prescription is digitized. Details like frequency and duration of a prescription are also taken into account.

This digitized version then gets verified again, and then once more after it reaches offline pharmacies. “There’s no difference that happens at that very last mile, except for the fact that the prescription till then happens in a digital format,” Gaurav says.

1mg’s target patient is one with chronic diseases because they’ll have the need to keep ordering. As of now, the toughest consumers to get on board are those whom Gaurav describes keenly. “There are plenty of people who are buying illegal over-the-counter drugs, and they’ll never use us,” he says.