India Cannot Solve Its Healthcare Problems By Operating The Way It Has Operated All These Years: Prashant Tandon, Co-founder, 1mg

In January 2013, a long Whatsapp message starting with “V.V.IMP” was doing the rounds. It went like this –

While to a normal user it might seem like one amongst the thousands of other forwarded messages, for digital health platform 1mg, it was a major turning point in their growth story. Before this message went viral, app downloads of 1mg stood somewhere around 60K-70K. But in a matter of two days, that number shot up to 330K!

For 1mg’s co-founder Prashant Tandon, the spike was a validation of the cardinal principle of any business – if your product really offers a key value, consumers will figure out how to use it as well as share it.

Prashant says, “One does not need to spend millions in marketing if you have an actual value for consumers. Even today those messages are circulated and we are growing organically. So if you are solving a real problem, then your service is your marketing. You don’t really need to be on TV. That one instance really opened our eyes that everything doesn’t need to be based on trying to push things to consumers. Consumers want good things; you just need to find what they want.”

Today with 7.1 Mn downloads and 9.5 Mn monthly visitors to its platform, it appears that 1mg has found its place as a genuine industry changing player. The Indian healthcare market is expected to increase at a compound annual growth rate of 16% to $280 Bn by 2020, according to FICCI-KPMG.

In a conversation with Inc42, Prashant speaks about the challenges in the healthtech segment and how India cannot solve its healthcare problems by operating the way it has operated all these years.

This interview has been edited for length and clarity.

Inc42: What was the tipping point for you to build 1mg?

Prashant: Sameer and I came back from the US in 2009 and started making practice management (e-prescription) software for doctors. To do so, we needed a database of medicines available in India and we found that there existed none. That’s when we manually made one. While we were making it, we saw that there was an interesting inefficiency in the Indian market. For the same generic salt, you had hundreds of brands and consumers had absolutely no idea. It was a market failure, there were so many companies competing, but prices were not really falling because consumers did not even know of these similar offerings. So we thought, let’s build an app with which we can create a certain degree of transparency.

Inc42: What was the problem you were trying to address?

Prashant: Medicine is a space which has been kept opaque from consumers by design. None of the stakeholders in the system want the consumer to have information.

We thought consumers should have the information and that’s when we started with HealthKartPlus. It grew to become India’s largest health app. Many millions of downloads later we saw that it was by far the largest health app being used in the country. That’s when we decided this product deserves our full focus and so, we demerged from HealthKart into a separate entity we called 1mg.

So it actually did not start as a typical business idea. It was something that we put out there because we thought it was interesting. Consumers caught on to it and we kept pushing ahead. Eventually, our customers began asking us that if we have the ability to show them alternatives, why are we not selling them too?And that’s when we added an e-pharmacy marketplace. When we started doing that, we started getting prescriptions. We saw that prescriptions also have lab tests. So we created a diagnostic marketplace on top of that.

It was a very atypical journey – which did not follow a business plan per se. It started with the need to create transparency and do interesting work in digital health and business kind of grew on it.

Inc42: What were the challenges you faced while attempting to strike fresh ground in the digital health domain?

Prashant: Challenges were multi-fold, especially when we started. Regulatory understanding was very poor, even amongst the regulators. They did not know where the regulatory standing of our platform was and we had to explain to them how this model operates.

Because there was a doubtful perception in their minds about the legitimacy of e-pharmacy as a business, given the prevalence of international smuggling of medicines through online trade. We had to explain to them that this is a simple marketplace model – a consumer gives us the prescription and we pass it on to a third-party pharmacy. We are not even technically an e-pharmacy, just a platform connecting the consumer to the pharmacy.

The second challenge was from the consumer perspective – getting them into the habit of getting and sharing prescriptions. In an offline world, people often did not bother getting prescriptions and they could get any medicine they wanted – on the phone or through a pharmacy. Consumers used to get upset with us, while we were merely following the law when asking them to upload prescriptions. This really hindered our growth at that stage.

The third challenge was that neither Google nor Facebook allow marketing for pharmaceutical products. So we had to have a more content-based growth, which makes the process slower but stronger. Thus, our consumers are less fickle in that sense.

Inc42: Healthtech being an upcoming domain, how large do you reckon is the market in India?

Prashant: In India, the pharmacy market is between $15 Bn to $20 Bn, the diagnostics market is somewhere between $7 Bn to $8 Bn. Between the two of them, you are talking about a $25 Bn to $30 Bn market, which is completely fragmented in the offline space. With 800,000 mom and pop pharmacies, another such 100,000 diagnostic labs, there was a big need for a branded, trustworthy player to consolidate – but very few such players existed in the market. That’s when we stepped in.

Inc42: Tell us about the typical consumer profile you had in mind while building 1mg.

Prashant: Now medicine is something that everyone needs but even in that space, our typical consumers are patients with chronic ailments like diabetes, hypertension, arthritis, osteoporosis – ailments that require repetitive, long-term medication.

Broadly speaking, there are three types of medicines – chronic, acute, and symptomatic. If it is acute or symptomatic, chances are you need it right away. But in case of chronic, you can plan your purchases well in advance, month after month. Also chronic patients have prescriptions which work well with our model as we lay emphasis on compliance and do not accept any order without a valid prescription.

All in all, we have seen two types of segments – one are the 50+ consumers, second is a lot of young people buying for their parents through the app.

Inc42: Given that you stress so much on valid prescriptions, what are the checks you have put in place to address their authenticity?

Prashant: I have five doctors and 35 pharmacists working in my team. Every prescription goes through three levels of check, the first being technology. So if the prescription contains a schedule X medicine or a habit-forming drug or anything that can be misused, we just don’t allow it to go through our platform. Whether valid or not, the risk for misuse is too high. Through technology we make sure that things like sleeping pills, narcotics, and psychotropic substances don’t go through. We have asked the government to define clear processes so that we are able to make sure that there is no mistake on that front.

Then there is a pharmacist who verifies it at our end. He checks the date of the prescription, if it’s too old, it gets rejected. If there’s any other issue that he finds with it, it gets rejected. Our rejection rates are as high as 30% to 40%. Lastly, it goes to the partner pharmacies where the pharmacist again has a look at it. That pharmacist has the final call on whether they want to entertain that order or not.

Inc42: How has the growth path been in terms of traction and app downloads? What’s your monetisation model?

Prashant: We have been growing consistently every month since inception and haven’t seen a down month, to date.

As an app we have seen 7.1 Mn downloads, the growth having been mostly organic. As of last month, we got more than 9.5 Mn visits on the platform. Our transaction services in pharmacy exists in 14 cities and diagnostics in a little more than 20 cities. We have about 30 to 40 partner pharmacies.

 

We monetise in a straightforward, simple marketplace model. For all the business we give to our vendor pharmacies, we receive a commission. So far, it is on pharmacies and diagnostics while e-consultations remain free.

We have also made early experiments with advertising models. We do invest quite a lot in quality of data and medical compliance. We have always invested more in our quality of content and product rather than marketing. In terms of our transaction business, we are easily growing double digits month on month. Every five-six months, we double our business.

On the team front, we have grown to 280 people, from the 60 last year when we demerged from HealthKart. A big part of it is customer service and operations as our transaction business has grown.

Inc42: Given the rise of numerous players in  the digital health domain, what is the USP of 1mg that places you in a different league?

Prashant: I think it’s our content. We are the Wikipedia of medicines for India – that brings people to the platform for information as well as purchase. It’s a huge differentiator for us. As Google and Facebook are not available for marketing, our competitors have to depend on TV and very heavy offline marketing. We have a much more sustainable customer acquisition model. That being said, it is one of the largest sectors, just getting started and the offline market is completely disorganised. There will be many players that will come up.

Inc42: What are the roadblocks and issues ailing the healthtech sector, which have prevented large-scale adoption?

Prashant: What was missing so far was the active tech adoption by the customers which is changing now. Innovation is a new way of doing things and healthcare as an industry is a heavily regulated industry. Regulation by definition means to ensure that everybody does things in a set way. So there is this disconnect as to how do you enable innovation in a regulated sector? That has been holding healthcare back.

Another challenge is the quality of talent in this space. Typical technology professionals personally do not deal with health care till they are of a certain age. Young, fresh engineering graduates relate instinctively to gaming or shopping than healthcare. Especially in India, you decide early if you want to take up medicine or engineering. Consequently, a medical guy has very little appreciation of technology while a technology guy has very little appreciation of healthcare. Now things are changing as more and more interesting models of people coming together from both sides are developing.

Inc42: As an early player in this space, what are the new trends you have observed in this space? Have have consumer attitudes changed with the advent of technology?

Prashant: I think a big change that is happening is that the consumer is going to start having a much more active role in healthcare.

What has happened so far, is that consumer has been a helpless recipient of healthcare. They take what they get – they don’t even know their options. And they assume that this is what is, they can’t do anything about it. Firstly because there is a mind block and because there is information, that is not available to the consumer. That is the big change-consumers are suddenly noticing that there are so many choices. There are so many service providers; they are reading on different platforms and learning more about their health.

So from being helpless recipients of healthcare, they are now turning into active managers of their healthcare. That’s the shift that is happening. Now they will demand better access/information, they will push the system to give them better quality treatments. It will take its time to manifest fully but it is not a change that can be reversed. It will only grow further in one direction and healthcare companies of the future have to start focussing on consumers.

Inc42: Healthcare has been a highly regulated sector. How much does the environment have to change for the sector to grow and accelerate at grassroots level?

Prashant: There is a huge scope and a huge need to change regulation-wise. India cannot solve its healthcare problems by operating the way it has operated all these years. We do not have enough doctors, enough infrastructure, or enough resources to cater to everybody unless we leverage technology in a really unique way and make it accessible to all consumers. So regulations will have to follow. The good news is that government is proactive right now and taking a positive view but I think there is no other way.

The physical infrastructure will never reach all the consumers. It will have to be digital infrastructure. We will need more and more technology platforms that will enable a junior level health worker in the villages to have information at his fingertips and can connect with doctors to treat people in the villages. Hence, access to healthcare, affordability of healthcare, quality and authenticity of healthcare, and awareness- all these have to be addressed through technology because old ways have never worked and will not work and the pressure on the system is only increasing.

Inc42: As a new age healthtech company, what are the steps you are taking to make the benefits of healthtech available in Tier III cities and villages?

Prashant: We are taking steps to increase awareness. We are very keen on making information available in local languages. A lot of our consumers are asking for it. So in the next few months, we will come out with multiple languages on the app. Also, we have tied up with a government programme where 170,000 villages are connected through broadband for provision of healthcare services. We have already partnered with a few initiatives with the government as we want to be involved in public health.  A lot of public health projects will never take off unless it is in partnership with private sector players like us.

Inc42: New healthtech devices have been making quite a noise in this space. What scope do you see for them, or are they just a passing fad with no tangible use case?

Prashant: Too early to say, even as I am observing them. Most of them are actually just step counters of different types. We will see a lot more innovations happen with them but I haven’t seen something that is very, very substantial till now. People are talking of blood pressure monitoring, blood glucose level monitoring, but very few systems are able to do it and do it accurately.

I think there are specific areas where these devices will make more sense. For instance, in the US, there is a device that sets an alarm if an elderly person falls down. As it’s a nuclear family set up and old people live by themselves, and accidents like this are a big cause of death, it makes sense. So you will have to figure out, sector by sector, what kind of information can get transmitted from what kind of device. There are these ECG devices that have come up but I would like to see more and more adoption.

Inc42: From e-pharmacy to diagnostics to e-consultation, you have everything on 1mg. What is going to be your focus in the coming years?

Prashant: Our focus is very simple – keep providing consumers with all the right choices, the right quality at the right price in managing their health overall. Since ours is a digital platform and we know our consumers one-on-one, we want to build a life cycle view of the health of our consumers and help them through that. Say, for instance, if it’s a diabetes patient, we want to make sure that we are involved in their journey of managing diabetes better. In that sense, rather than being a single transaction platform like most pharmacies or most diagnostic centres, ours is a lifecycle patient-centric view.

The unfortunate reality of healthcare in the country is that most people think it is a one-time transaction; squeeze the patient when you have them. I don’t think it is the right way to look at it. If you are the trusted partner of that patient through the journey, you will be able to offer a lot of positive benefit to the patient while having a good business for your company as well. This is possible with digital healthtech platforms as you have that one-on-one connect and you have data. So, certainly all healthtech companies have to take a more holistic view than a unit transaction view.

Additionally, we are working a lot on patient adherence, making them comply with their medical treatments. We also launched a pill reminder recently. We are trying to figure out deeper ways to engage the consumer to comply with the health care that they have been advised. On the e-consultation part, we are building a technology to help the patient find the right kind of doctor for them algorithmically.

Inc42: What works better – tech collaboration such as incorporating diagnostics, e-pharmacy, and e-consultation on a single platform or focussing on one aspect?

Prashant: I believe it’s critical to focus on everything because the patient needs all of these. When you go to a hospital you get all of this together- you get your medicine, tests, and consultation all at one place. However, in the retail market it has been structured differently. But the same patient needs all of them and you should be able to provide all of them as it gives you an integrated view of the patient rather than just your side of the story.

I do not think a consumer will keep five six different health apps on the phone. There will be one or two health apps on his phone and we want to make sure that we are that app.

[Note: This article is part of The Junction Series. Prashant Tandon will be speaking at “The Junction” in Jaipur in January 2017. Get a deep dive on innovations in HealthTech, the Indian startup ecosystem and more with him. Learn more about The Junction here!]