Tata Digital, the subsidiary of Tata Sons is set to acquire a majority stake of between 50-60 percent in digital health startup 1MG. The company will be valued at $450 million post-money, as per sources, with the deal also likely to mark exits for some early investors.
Prashant Tandon, the CEO of 1MG, told CNBC TV 18 in an exclusive interview that this is a significant milestone for the company in its journey. “1MG was started to make healthcare understandable, accessible, and affordable and in Tata Group we find a very unique alignment, a brand name that is trusted, a group that is known to do things the right way,” he said.
Started in 2015, 1MG is a leading player in the eHealth space and enables easy and affordable access to a wide range of products like medicines, health and wellness products, diagnostics services and teleconsultation to customers.
"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," Tata Digital CEO Pratik Pal said in a statement.
Tandon added that it perfectly suits 1MG to work with Tata as partners to take their startup to the next level and create India’s best healthcare company from here.
“Broadly, digital health space is seeing a massive change. It is an inflection point. Especially post the pandemic the need and appreciation of delivery of healthcare services where the consumer is at their doorstep has only grown manifold,” he said.
According to Tandon, this sector requires a lot of investments, streamlining, technology, and “really big and good teams working at it.”
“It is a sector coming of age, it is a sector where clearly the large players feel that this is one of those opportunity areas where it is imperative that the big players have a role to play and those investments that long-term commitment that can come from the strategy is very important for this sector,” he said.
PHARMACY BUSINESS TO MORE THAN DOUBLE IN 2021
1MG saw a surge in demand for Covid-related products during the second wave of the pandemic, and Tandon said that there is a consumer behaviour change to opt for digital platforms not just for
"We had planned to grow 100 percent in 2021, but we are resetting the figure to 150 percent," Tandon said.
According to the Tata Group, the digital healthcare market stands at $1 billion currently and can grow at a CAGR of 50 percent.
Tandon is more bullish and expects the space to grow faster than that, given the tailwinds from the pandemic.
1MG is looking to leverage Tata's footprint to deepen its reach in smaller towns in the country.
"25 percent of our business is coming from outside the top 100 cities, and we hope that one-third of our business should come from beyond the top 100 cities in the next few years," Tandon said.
"The footprint within the Tata Group will help immensely to go deeper," he added.
1MG 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.
DIAGNOSTIC BUSINESS TO GROW 200 %
1MG operates 3 diagnostic labs and expects strong growth in the business.
"We expect our diagnostics business to grow over 200 percent in 2021," Tandon added.
A lot of people got COvid tests done through us and our partner network. Consumers will want a safer experience at home and not go to a diagnostic centre," he added.