The International Finance Corporation (IFC), the private-sector investment arm of the World Bank, plans to invest an undisclosed sum in Gurugram-based 1mg Technologies Pvt. Ltd, which operates an eponymous online pharmacy.
The development comes a little under three months after TechCircle reported in November 2018 that 1mg was looking to raise up to $60 million in funding from new and existing investors.
Existing investors Sequoia Capital India, Omidyar Network and Swiss healthcare-focused investment firm HBM Healthcare Investments had also put in money in that round, which valued the company at around $200 million (Rs 1,410.53 crore then).
Founded in 2011 by Prashant Tandon, Chauhan and Agarwal, the online pharmacy, which was previously known as Healthkart Plus, allows customers to order medicines, consult doctors and also purchase health products on its website and via its app. Users can also book diagnostic services and lab tests.
The platform claims to have more than eight million unique users every month. The company has expanded its labs and e-consultation business over the past year, with online medicine sales now accounting for 60% of its revenue.
Tandon co-founded online health product platform Healthkart, from which 1mg was hived off as a separate entity in 2015.
For the financial year 2017-18, the company’s operating revenue surged eight-fold while losses widened three-fold. At the same time, the firm’s losses also rose by more than three times for the financial year ended 31 March 2018.
The e-pharmacy segment
Besides 1mg, the online pharmacy sector has some well-funded players such as PharmEasy, Myra and Netmeds, all of which have raised funding in recent months. Currently, 1mg is the biggest player in the segment by net sales.
E-pharmacies have been facing severe opposition from traditional pharmacists. There were several strikes against the government’s move last year to regularise online pharmacies while a number of petitions were also filed in different courts against the entities.
The Delhi and Madras High Courts had banned the sale of medicines online in separate orders issued over the past couple of months. However, in its latest ruling in January this year, the Madras HC stayed an order banning the sale of medicines online.
The government is expected to amend the Drugs and Cosmetics Rules, 1945, also known as the draft E-Pharmacy Rules, but the change will only take place after the country’s general elections in May, a top government official who is part of the consultation process had told TechCircle last month.
Offline pharmacies have alleged that their online counterparts sell prescription drugs and controlled substances without valid prescriptions. They also accuse e-pharmacy players of offering bulk discounts, which affects the business of the traditional players.
The e-pharmacies have countered these allegations. However, until the government offers more clarity on the draft rules, online pharmacy companies will continue to operate in a regulatory grey area.