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Case Study

From HealthKartPlus to 1MG: Growth plans

By James E. Henderson, Matthias Abicht, Pavlos Batagiannis, Bryan Frey and Peter Ulwahn

15 pages

August 2021

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Reference: IMD-7-2236

The “1mg” case focuses on a key strategic dilemma of an entrepreneur in times of digitalization. Should 1mg be just an e-pharmacy and designed as pure pipeline business, a marketplace or be a hybrid between these two? Should it adhere to the current stakeholder constellation, or should the needs of patients, and no longer those of doctors and hospitals, be at the centre of the healthcare ecosystem? India’s healthcare market in 2014 was expected to grow with 14% CAGR reaching by 158B$. E-pharmacies not only enjoyed the support of the national government to reduce costs and improve quality of medication, but also to increase access to people in rural areas, comply with India regulation and increase sales tax collection. Traditional pharmacies were regulated under the Drug & Cosmetics Act whereas e-pharmacies were regulated under the IT Act. These different regulatory bases created distortion. It was expected that regulation would be clarified and give digitalization a strong boost. That said, the traditional brick and mortar pharmacies were still playing a critical role in the overall supply chain. At the same time a plethora of competitors were attracting funds by international venture capitalists and gain market traction, either based purely on new digital technologies or on their existing healthcare footprint. The case describes the different market segments based on demographics, health habits, age, and combines it with the penetration data of the mobile industry in the life of urban & rural Indians. The case also tackles the question of profitability versus growth and provides all the elements needed for a debate over the business model choice to be implemented.

Learning Objective

Understand the characteristics but also the limitations of the platforms
How the ecosystem can be changed by altering the focal point of the stakeholders mapping (doctors to patients)
How to apply different business models in an industry (Platforms, E-commerce, or Hybrid) and how regulations, or their lack, impact the chance of success
Understand the impact of the growth and profitability metrics in a platform / hybrid business model.

Keywords

Strategy, Platform Strategy, Business Model, Customer Insight, Segmentation, Five Forces Framework, Blue Ocean Strategy

Settings

India
Tata Group, Tata 1mg, Healthcare
2009-2015

Type

Field Research

Available Languages

English

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