India’s pharmaceutical market is filled with generic options—but they don’t always save consumers money. In fact, some drugs are even more expensive than their branded counterparts. Created to give patients more power over their health costs, startup 1mg announced today that it has raised a $16 million Series B led by Maverick Capital Ventures, with participation from returning investors Sequoia India and Omidiyar Network.
1mg currently offers two main services: an online pharmacy and a platform for finding medical labs. Founder Prashant Tandon says the company’s new funding will be used to build more analytic tools, expand to 30 Indian cities by the end of 2017, and enter new online health verticals.
Founded in 2012 as a drug information app called HealthKartPlus, 1mg spun out from its parent company, Bright Lifecare, last year and changed its name last year after raising about $5.5 million in its first funding round. Now 1mg claims more than 5 million app downloads, and two million monthly unique visitors who view a total of 25 million pages every month.
Before becoming an entrepreneur, Tandon worked with healthcare clients as a consultant at McKinsey in San Francisco. After moving back to India in 2009, he founded his first startup with Sameer Maheshwari. Called HealthChakra, it developed management software for healthcare providers that included an online prescription platform with information about all medicines available in India.
While digitizing drug information, Tandon and Maheshwari discovered that the country’s pharmaceutical market is flooded with generic options. While generic drugs usually let consumers in the U.S. shave a lot of money off their healthcare costs, that is not always the case in India.
“In India, for most common generic medications, there are more than 80 to 100 brands trying to sell what is a commodity product. However, there are vast differences in prices between brands, and all brands operate at very high margins,” Tandon tells TechCrunch. “We made this price distortion transparent to the consumer, so now the consumer could ask a doctor why he may not take brand A versus brand B and save 70 to 80 percent.”
HealthKartPlus was first launched by Tandon and co-founder Gaurav Agarwal as an app for HealthKart, but as it gained traction, the two added more features until it was spun off into a separate company. Now 1mg’s online prescription service ensures patient safety by only working with pharmacies that are required to make sure batch information about all medications they dispense are traceable. Labs for its online diagnostics services are also audited.
The Indian healthcare market is expected to increase at a compound annual growth rate of 16 percent to $280 billion by 2020, according to FiCCI-KPMG. Indian patients, however, still face many barriers, including lack of access to affordable primary care and transparency about providers and drugs. Other health tech startups tackling those issues include online consultation services like SeeDoc and Lybrate ; doctor search platform Practo; and online pharmacy NetMeds.
1mg’s plan is to grow its revenue at 20 to 30 percent month-over-month “for the foreseeable future,” Tandon says, with the goal of becoming India’s largest online pharmacy and diagnostics platform.
“We believe given the fragmentation of the industry, the largest platforms will be digital marketplaces as India leapfrogs brick-and-mortar based retail,” he adds.