Tata Digital acquires majority stake in 1MG
After acquiring online grocery store BigBasket and investing in fitnessfocused startup Curefit, Tata Digital, a 100 per cent subsidiary of Tata Sons, the holding company of salt-to-software Tata empire, is expanding its digital presence in the fast-growing e-pharma space by buying out a majority stake in 1MG Technologies.
Incorporated in 2015,
1MG provides access to a wide range of products like medicines, health and wellness products, diagnostics services and tele-consultation to customers. It has three diagnostics labs and a supply chain covering over
20,000 pin codes. It is also engaged in B2B distribution of medicines and other healthcare products.
According to consultants RedSeer, 1MG is a leading player in the ehealth space, which touched a gross merchandise value of $1.2 billion in FY20 and is estimated to have clocked $2 billion in FY21. E-health has been one of the biggest beneficiaries of the
Covid-19-driven lockdown, seeing a 3x jump in user households. This space has seen several major deals happening in recent times. Reliance had acquired a majority stake in Netmeds, and Medlife was bought over by its rival PharmEasy. The presence of large conglomerates like Reliance and Tata in the space will fuel faster growth in the segment.
"The investment in 1MG strengthens Tata's ability to provide superior customer experience and high quality healthcare products & services in the e-pharmacy and e-diagnostics space through a technology led platform," said Pratik Pal, CEO of Tata Digital.
Though the company did not divulge the financial details of the transaction, it had invested Rs 100 crore in 1MG through debt a few months back.
It was later reported that Tata Digital was eyeing a 65 per cent stake in I MG, valuing the outfit at about Rs 1,200 crore, but no word on this has come from either companies.
Tata Group has been fast expanding its digital business both organically and inorganically. While it already has a presence in the horizontal space with Tata Cliq, Tata Digital has been acquiring key players in some of the fast-growing verticals. It had recently acquired a controlling stake in BigBasket. Reliance too is betting big in this segment with its JioMart. The segment already has biggies like Walmart and Amazon expanding their footprint. The online grocery market has grown 30 times in the last eight years to reach $3 billion. It is now expected to grow at a 59 per cent compound annual growth rate to $18 billion by 2024, RedSeer estimates.
A few days back, Tata Digital announced its investment of $75 million in Curefit. In fact, group patriarch Ratan Tata had realised the potential of digital business in its initial years and has been investing in digital startups. Curefit was one among them. He has even exited Lenskart with handsome returns.