Tata Digital to acquire majority stake in 1mg

Tata Digital, a subsidiary of Tata Sons Private Ltd, continues on its journey to strengthen its digital offerings. On Thursday, the company announced that it will acquire a majority stake in e-pharmacy platform 1mg. 

While the company did not disclose the size of the deal, sources told Entrackr that 1mg will be valued at over $400 million, and it involves primary and secondary transactions. Founders of 1mg including Prashant Tandon will stay on.

With this acquisition, Tata Digital will strengthen its presence in the consumer tech space and get a boost to bring it up to pace with rival Reliance, which had acquired a majority stake in competing e-pharmacy service Netmeds in August 2020. 

Along its path to strengthening its digital business, Tata Digital recently invested $75 million in fitness startup Curefit, appointed its co-founder and CEO Mukesh Bansal as Tata Digital’s president, and acquired a majority stake in grocery marketplace BigBasket. 

Tata Digital said that 1mg operates three diagnostics labs, has a supply chain covering over 20,000 pin codes across India and also offers B2B distribution of medicines and other healthcare products. 

“E-pharmacy, e-diagnostics and tele-consultation are critical segments in this ecosystem and have been among the fastest-growing segments in this space, as this sector enabled access to healthcare through the pandemic,” Tata Digital said in a statement. 

“The overall market [e-pharmacy] is around $1bn and expected to grow at —50% CAGR driven by increased health awareness among consumers and greater convenience,” the company said. 

To be sure, in April, Tata Digital had infused Rs 100 crore debt in 1mg, and at the time had valued the company at Rs 1,770 crore or $240 million, Entrackr had exclusively reported. 

According to Fintrackr, 1mg had recorded a 77% jump to Rs 358 crore in its operating revenue in FY20 from Rs 202.3 crore in FY19. Its losses also rose by 6.6% to Rs 318 crore during the fiscal ended in March 2020.

Aside from Netmeds, 1mg also faces competition from PharmEasy which received the Competition Commission of India’s approval for a merger with Medlife in September 2020 and e-pharmacy offerings from Amazon and Flipkart.