How Does 1MG Make Money?

Full Business Model Explained

Supti Nandi Updated on: April 16, 2023

BUSINESS MODEL BUSINESS STARTUPS

Below, we have explained the 1MG Business Model. We have discussed the numerous revenue sources through
which it makes money along with its marketing strategy.

Online pharmacy has huge scope in the Indian market. An online pharmacy operates over the internet to deliver
healthcare/medicine orders to your doorstep. A popular entity in this field is “1mg.” Do you know 1mg is a
rebranded company? HealthkartPlus- the generic drug search business was rebranded
as 1mg in 2015. Soon, it became a leading digital pharmacy center. How? Due to its efficient business model!
You will get to know all about it in this article.

Stay tuned!

1mg: A Brief Overview

First of all, let’s have a brief overview of the company.

Company’s Name 1mg

Type of Industrial Segment e-pharmacy company

Founders Prashant TandonVikas ChauhanGaurav Agarwal

Founding Year 2015

CEO Prashant Tandon

Headquarters Gurugram (Haryana, India)

Tagline “Understandable, Accessible, and Affordable”

 Type of Brand B2C (Business-to-Consumer)

Market Valuation (FY22) INR 3,677 crore

Revenue (FY22) INR 222.10 crore

Expenses (FY22) INR 1,171 crore

Net Profit/Loss (FY22) Loss of INR 281.41 crore

1mg: A Brief Overview

(Note: Tata Digital Ltd acquired a 55% stake in 1mg in June 2021. Thus, it became Tata 1mg.)

The three important parts of the 1mg business model are-

Working Strategy
Revenue Sources
Marketing Strategies

Working Strategy: How Does it Work?

The working strategy of 1mg is similar to other healthcare delivery apps like PharmEasy, Apollo
Pharmacy, etc. It employs a multifaceted working strategy to provide its users with a convenient and
accessible healthcare experience. Here are the key elements of 1mg’s working strategy.

1. Products

1mg offers the following products-

Medicines
Vitamins and Supplements: Multivitamins, Nutritional Drinks, Healthy snacks, and drinks,
Protein supplements, Omega & Fish oil, and Immunity boosters.
Personal Care Products– Creams, Lotions, and Oils.
Healthcare Devices: Thermometers, Weighing scales, Oxygen cans, Nebulizers, Vaporizers,
Oximeters, Diabetes monitors, Body massagers, etc.
Ayurveda Products: Herbal juice, mind care, Popular herbs, etc.
Homeopathy Medicines
Covid Essentials: Covid-19 self-test kits

2. Advanced Technology
The 1mg business model leverages technology to create a seamless online platform that connects consumers
with healthcare providers. All of its credit goes to its user-friendly interface. The website and mobile app of
1mg allow users to-

Easily order medicines

Book lab tests
Online consultation with doctors
Personalized health approach with the help of advanced algorithms and data analytics Easy
registration and logins
Smooth navigation of the portal
Efficient profile management

3. Partnerships

The essence of online pharmacy lies in its partnerships. Therefore, 1mg partners with the following-

Pharmaceutical Companies
Healthcare Providers
Stakeholders in the healthcare ecosystem
Doctors for telemedicine
Diagnostic laboratories for lab tests and health check-ups
Delivery partners (Delivery agents to deliver the medicine to your doorstep).
Sponsored content for advertisements

4. Steps

The working method of the 1mg business model comprises some simple steps. You need to complete
the following steps to get your order fulfilled by 1mg.

STEP 1: PRESCRIPTION UPLOAD/ ORDER PLACEMENT

You go to the app and load the prescription. In case your medicine doesn’t need a prescription, then you can
place the order directly.

STEP 2: PRESCRIPTION VERIFICATION

1mg representative goes to the partner pharmacy to verify the prescription and collect the medicine.

STEP 3: MEDICINE PACKAGING

Here, the medicines are packed safely. Then, the package is handed over to the delivery man (delivery partner)

STEP 4: DELIVERY
Finally, the medicines are delivered to your doorstep. You can make the payment in advance through the
digital payment system or via COD (Cash on Delivery).

5. Subscription Plans

Subscriptions plans of 1mg i.e., 1mg plus provide premium services and additional benefits like-

Free doctor consultations

Discount on medicines
Discount on diagnostics
Care Plans
Health Product orders.

Overall, 1mg’s working strategy revolves around leveraging technology, providing a wide range of
products and services, ensuring quality, focusing on customer experience, building partnerships,
leveraging data-driven insights, and complying with regulatory requirements to offer a seamless and user-
friendly healthcare experience to its users in India.

Revenue Sources: How does 1mg make money?

Now, here comes the most anticipated part of the 1mg business model. “How does 1mg make money?”
Through its numerous revenue sources. Do you know that it made a revenue of INR 222.10 crore in the
financial year 2022? The credit goes to its efficient revenue sources. 1mg makes money through the
following-

1. Product Sales

The selling of products via e-commerce is the primary source of revenue for 1mg. In the above section, you
have read about the product it sells. Thus, it earns revenue by selling its products to consumers. It earns money
through product sales by sourcing them directly from manufacturers and authorized distributors by keeping a
specified profit margin.

2. Diagnostic Services

As you know, you can book lab tests online in the 1mg app. 1mg earns revenue by charging a fee for
facilitating the booking of lab tests and health check-ups and by receiving a commission or margin from
partner diagnostic labs for the tests conducted. This is a major source of revenue in the 1mg business model.

3. Telemedicine
This is the highly sought feature of the app. 1mg enables users to consult with qualified doctors through
its telemedicine platform. Users can book appointments with doctors online, have video
consultations, and receive medical prescriptions. 1mg earns revenue by charging a fee for facilitating
telemedicine consultations and receiving a commission or margin from doctors for each consultation.

4. Subscription Fees

The subscription plan of 1mg that you read above i.e., 1mg plus offers additional benefits. For this, you need to
pay an additional fee at once to enjoy the premium services for a specified time. These subscriptions generate
recurring revenue for 1mg that provides a stable money-earning stream for 1mg.

5. Profit Margin From Partnerships

1mg has numerous partners including pharmaceutical companies, retailers, and delivery partners. During
the buying and selling of medicines, it earns a good profit margin that contributes to its income.

6. Advertisements

Have you seen the recommendations of medicines, retailers, or diagnostic labs in the 1mg app? Their
medicines are a part of the advertisement. Various pharmaceutical companies, healthcare providers, and other
stakeholders use the platform of 1mg for advertising/promoting their products and services.

Marketing Strategies

1mg utilizes a multi-channel marketing approach to promote its digital health platform and attract users.
Some of the key marketing strategies of the 1mg business model are-

1. Referral Programs

1mg encourages its existing users to refer the app to their friends and family and earn lavish offers and
discounts. For each successful referral, you can earn various incentives. With successful
referrals, we mean that the new user should install the app and make a purchase through it. Do you know
that 1mg also offers loyalty programs such as 1mg Cash? Here you can earn cashback on
purchases, which incentivizes repeat usage and customer loyalty.

2. Promotions And Discounts

1mg offers regular promotions and discounts on medicines, healthcare products, diagnostics, and
telemedicine consultations. You must have seen it on their official website. This includes offers,
special deals, discounts, or freebies to first-time users, using coupon codes, and running promotional
campaigns during festive seasons or special occasions. It immensely helps to attract new users and incentivize
repeat purchases.

3. Grandmaster Series Campaign

This was a successful campaign that attracted the highest number of users of 1mg. How? You may ask.
Because of its brilliant initiative to bring the veteran/experienced/Grandmaster medical
practitioners to the limelight. It was a tribute to the veteran doctors. It presented the unsung heroes of the
medical field who sincerely served the community for a long period. The first video featured Dr.
Anand who served the community in his 80s. This campaign aimed to regain the trust of folks in
medicine. And it was successful too!

4. Franchise Business: “Sehat Ke Sathi”

1mg introduced a franchise business named “Sehat ka Sathi.” In this franchise opportunity, you can
get a medicine franchise with an investment of only Rs.10,000 only. With this, you can become a 1mg lead
generation partner and launch a medicine business. It is a potent opportunity to develop a community of Indian
healthcare startups.

Conclusion

1mg is a leading digital health platform in India that provides online pharmacy, diagnostics, and
telemedicine services. 1mg business model revolves around leveraging technology to connect consumers
with healthcare providers, making healthcare more accessible, convenient, and affordable.

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Published By: Supti Nandi

Supti is a finance major and a technophile having remarkable skills in writing around her interests.
Her range of interests spans across multiple topics which ranges from finance to scientific research.
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