Tata Digital will buy a majority stake in digital health company 1MG, the latest in a series of investments that Tata Group has made as part of a strategy to build a super app. The move comes weeks after it bought BigBasket and announced an investment in CureFit.
“The investment in 1MG strengthens Tata’s ability to provide superior customer experience and high quality healthcare products & services in e-pharmacy and e-diagnostics space through a technology-led platform," said Pratik Pal, CEO of Tata Digital in a release.
Prashant Tandon, Co-Founder & CEO, 1MG, said: “We are delighted to join hands with one of India’s most iconic & respected conglomerates. This marks a significant milestone in 1MG’s journey to make high quality healthcare products & services accessible to customers across India.”
Founded in 2015, 1MG is a player in the eHealth space and enables easy & affordable access to a wide range of products like medicines, health & wellness products, diagnostics services and teleconsultation to customers.
The company operates 3 diagnostics labs, has a supply chain covering over 20,000 pin codes across the country and through its subsidiaries is also engaged in the business of B2B distribution of medicines & other healthcare products.
Tata Digital in a note said the investment in 1MG is in line with Tata Group’s vision of creating a digital ecosystem that addresses the consumer needs across categories in a unified manner. E-pharmacy, e-diagnostics and teleconsultation 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.
Earlier this week, Tata Digital said it will invest up to $75 million in the healthtech startup CureFit, subject to completion of diligence process and other approvals. CureFit Founder & CEO Mukesh Bansal will join Tata Digital in an executive role as President, Tata Digital and will also continue to lead CureFit.
Tata Group's ambitions for its super-app plan recently received a shot in the arm with the competition regulator giving its nod for Tata Digital's acquisition of BigBasket, one of India's leading online grocery platforms.
The fast-growing online pharmacy space has seen a lot of investment and consolidation in the last year. While API Holdings, which owns PharmEasy, recently became a unicorn and is also planning a public listing, Reliance bought a majority stake in Netmeds. Amazon too forayed into the online pharmacy space in Bengaluru last August, allowing customers to order prescription-based medication in addition to over the counter medicines.
Traditionally, Indian corporate houses have stayed away from investing or taking bold bets in valuation-driven, high loss-making businesses. Startups have thus had to rely on foreign investors and funds for a majority of their funding. Investors say the Tatas move may set the trend for Indian conglomerates to bet on new-age business models.
The Tata Group has huge ambitions for the e-commerce space, which is currently dominated by Amazon, Walmart-owned Flipkart, with Reliance Industries also expanding aggressively through JioMart.
It is building a super app under Tata Digital, with plans to add categories such as groceries, health, education, entertainment, electronics, fashion, travel, beauty and lifestyle. It also plans to leverage the strength of group companies such as Titan, Voltas, Trent, Tata Consumer Products, Tata Motors, Vistara, Tata AIG, Tata Capital and Taj Hotels, offering users an array of services in one app.
In fact, a few months ago, Tata Digital had infused Rs 100 crore worth of debt in 1MG through compulsorily convertible debentures. According to Fintrackr, this investment had valued 1MG at $240 million. Its other investors include Omidyar Network, Sequoia Capital, IFC and Kae Capital, among others. Tandon is expected to stay on and lead 1MG, after the acquisition.Tandon's venture dates back to 2011, when he founded Healthkart, along with Sameer Maheshwari. In 2015, Healthkart's generic drug search business HealthkartPlus was spun off and renamed 1MG. Tandon, who went on to head 1MG had said then that he wanted to make it the primary health app on every smartphone in India. For FY20, 1MG reported revenue of Rs 369.3 crore and a loss of Rs 317 crore.