Tata Group in talks to acquire majority stake in e-pharmacy 1MG: Report

Looking to foray into the e-pharmacy business, the Tata Group has initiated talks to acquire a majority stake in e-pharmacy 1MG, according to a report in the Economic Times. Parallelly, 1MG is also reportedly in talks to raise $100 million in funding from a private equity consortium, led by Gaja Capital. 

“There is definitely a lot of interest in 1MG and Tatas have held talks with them as part of the broader e-commerce push. At the same time, Gaja continues to engage with 1MG over its planned $100-million fund-raise,” a person with knowledge of the matter told ET. 

The overall round is expected to surpass $100 million in size, with the arrival of the Tatas. 1MG was working out the contours as to which investors they want to go ahead with when Tatas expressed interest, another person aware of the discussion told ET. 

1MG is the only remaining major independent player in the space and if the deal with the Tatas goes through, it would also become part of a bigger group. 1MG closed its last round in 2019 and was valued at $200-225 million. 

1MG’s business is divided between medicine delivery and services like lab tests and online doctor consultation. Its existing investors include Sequoia Capital and World Bank investment arm IFC (International Finance Corporation). It is likely to expand and integrate online consultation, online lab testing, and doctor consultations. 

In August, Amazon entered India’s online pharmacy market, and launched ‘Amazon Pharmacy’ in Bengaluru. In August, Reliance had acquired a majority stake in Netmeds for Rs 620 crore with the investment representing around 60% of Reliance's holding in Vitalic, Netmeds' parent company. In the same month, online healthcare aggregator PharmEasy had applied with the Competition Commission of India (CCI) seeking approval to merge with rival Medlife. The valuation of the combined entity was estimated to be around $1.2 billion.

Tata Group is also reportedly in advanced talks to acquire close to 50% stake in e-grocer Bigbasket.