Exclusive: 1mg Looks To Raise $17 Mn Debt From Existing Investors

Online pharmacy 1mg is raising INR 133 Cr ($17 Mn) in debt from existing investors MPOF Mauritius, MAF Mauritius, HBM Healthcare Investment, AG’s subsidiary KWE Beteiligungen and World Bank’s investment arm International Finance Corporation (IFC).

According to the ministry of corporate affairs filing accessed by Inc42, 1mg has accorded to offer, issue and allot from time-to-time up to 38,668 Class 6 12% compulsorily convertible debentures (CCD) having the face value of INR 34,417.87 each to the said investors. Overall, the company has raised INR 1,33,08,70,197.

Here’s a breakdown of Class 6 CCD round:

• MPOF Mauritius Ltd picked up 7,158 shares for INR 24.63 Cr
• MAF Mauritius Ltd picked up 3,890 shares for INR 12.38 Cr
• HBM Healthcare Investments picked up 11,048 shares for INR 38.02 Cr
• KWE Beteiligungen AG Ltd picked up 11,048 shares for INR 38.02 Cr
• International Finance Corporation (IFC) picked up 5,524 shares for INR 19.01 Cr

Prashant Tandon, CEO of 1mg while speaking to Inc42 cofounder and CEO Vaibhav Vardhan in the fourth edition of Ask Me Anything series under the #StartupsVsCovid19 campaign said that the surge in the demand for an online healthcare marketplace might open funding opportunities in the healthtech space. 

According to Tandon, recognition of telemedicine as an essential service by the government had brought in a massive shift for healthtech companies.

In August 2018, the government had released guidelines for online pharmacy companies under the Drugs and Cosmetics Act. After multiple feedback rounds and more than a year later, there has been no update. In response, Tandon had said in December 2019, that the long policy holdup was causing issues in ease of doing business for epharmacies. He had then also noted the telemedicine companies have been in discussion with regulators and ministries for over four years and have participated in multiple stakeholder discussions. 

For Tier 2 and Tier 3 markets, Tandon predicted that the assisted retail model will grow. Which is essentially a self-enterprising individual who downloads the app and helps the local community access consultations online. He noted that the 1mg has witnessed 50-60 consultations being booked from a single account registered from a non-metro city. 

Last June, the company had raised a $70 Mn Series D round led by Corisol Holdings, along with the World Bank’s investment arm IFC. Other investors including Redwood Global, Korea Omega Healthcare Fund, existing investors such as Sequoia Capital, Maverick Ventures, HBM Healthcare investments, Omidyar Network and Kae Capital also participated in the round. 

1mg was launched in April 2015 after Healthkart separated its generic drug search business, HealthkartPlus, and rebranded it as 1MG. The company has three business verticals — pharmaceuticals, labs, and doctors. Its founders include — Prashant Tandon, Gaurav Agarwal, and Vikas Chauhan.  This year, the company has also received INR 20 Lakh in grant from Action Covid-19 Team (ACT) to tackle Covid-19 crisis in India.

According to DataLabs by Inc42+ estimates, the Indian healthtech market will contribute $21 Bn by 2025, which is still only 3.3% of the total addressable healthcare market which is pegged to reach $638 Bn in 2025. Startups competing with 1mg in the epharmacy space include Pharmeasy, Netmeds, and Medlife. With its labs and doctors vertical, the company also competes with a slew of telemedicine startups such as Practo, Lybrate, mfine, and DocsApp.

Healthcare industry in India is said to be one of the fastest growing sectors backed by India’s rising income, health awareness, and access to insurance, but also due to the increase in lifestyle and stress-related diseases. The IBEF has estimated the Indian healthcare market to be valued at $372Bn by 2022.