The Tata group is in talks to acquire a majority stake in 1 mg online pharmacy, with the salt-to-software services conglomerate attracted by the rapid growth of e-pharmacies in India due to the outbreak of Covid-19.
If the deal goes through, the face of India’s developing e-pharmacy market could be dramatically altered, with two of the country’s largest companies vying for a piece of the action.
In August, Reliance Retail, a subsidiary of Reliance Industries, India’s largest business conglomerate, acquired a 60 % stake in Vitalic, the parent company of Netmeds, a Chennai-based online pharmacy start-up, in a deal valued at about Rs 620 crore.
The talks continued as Tatas looked to develop their platform for super-apps. The strategy of the Tata group is to pick up the controlling stake but retain the management to run the operation.
In advanced talks with India’s largest online grocery firm, BigBasket, the Tata group invested as much as $1 billion in the company in exchange for about 50% interest. People in the know said it was only one of the Tatas’ many partnerships expected to scale up their presence in digital retail.
The Sequoia Capital-backed 1 mg has been in negotiations to raise about $100 million, but another person familiar with the matter said the financing might not come through.
The entry of Tata also coincides with the largest online retailer in the world, Amazon’s foray into the e-pharmacy market, which, in collaboration with Cloudtail, launched its prescription drug delivery service in Bengaluru in August.
Amazon has a 24 percent interest in Cloudtail’s parent company.
A wave of consolidation has begun with strategic investments in India’s online pharmacy market, with Mumbai-based Pharmeasy, funded by Temasek, CDPQ, and Orios Venture Partners, agreeing to merge with its smaller Bengaluru-based rival, Medlife.
The Gurugram-based 1 mg, Pharmeasy, Netmeds, and Medlife are the country’s four largest online pharmacies and have sought to diversify their businesses with online laboratory research, doctor consultations, and event management services for insurance claims.