Tata 1mg plans more offline forays as it looks to raise $300 million
Tata 1mg
is re-entering an investment phase as the online pharmacy looks to expand its offline presence amid talks of an external funding round, according to people in the know.
Tata Digital
had acquired a strategic stake in 1mg in 2021. Since then, the e-pharmacy firm has raised only $40 million, through a rights issue from Tata Digital in 2022.
The planned $300 million external fundraising for 1mg marks a shift in strategy for the salt-to-software
Tata Group
, which had last year asked 1mg and its grocery delivery firm BigBasket to increase reliance on debt to fund growth.
ETtech
In fiscal 2025, 1mg's revenue is estimated to have grown 30-35% to around Rs 2,500-2,600 crore, people aware of the matter said. Its annual cash burn is about Rs 180-200 crore, with a significant part of this going into new initiatives including offline expansion, one of the people said.
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In FY24, its revenue had grown 21% to Rs 1,968 crore with over 80% of this coming from medicine sales, as per filings made with the Registrar of Companies. Net loss shrank to a fourth at Rs 313 crore compared with Rs 1,255 crore in FY23.
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Since being acquired by the Tata Group, which currently owns a 67% stake in 1mg, the company's revenue has more than tripled until FY24. In fiscal 2021, 1mg had reported revenue of Rs 309 crore. In the remaining 33% stake in the company, its founders own about 7%, while investors such as European family office Corisol Holdings, World Bank's investment arm IFC and others hold the rest.
Offline push
In addition to offline sales, the company is increasing its push behind institutional business.
The company's business-to-consumer segment, which includes e-pharmacy, e-diagnostics and consultation services, now contributes 70% to its revenue, sources said. Under the institutional segment, 1mg provides its offerings in tie-ups with hospital chains, clinics and insurance companies.
It is also building a full-stack approach ranging from consultation to management of specific diseases and conditions. It has started this programme with obesity and cancer. 'This includes helping patients deal with initial doctor consultations, diagnostics, creating a medical and dietary plan, working with hospitals as well as insurers,' a person in the know said.
Responding to queries by ET, 1mg founder and chief executive Prashant Tandon said the company is 'focusing on a new phase of growth' with online pharmacy and digital diagnostics 'now being close to profitability'.
'Several new initiatives are underway, and offline expansion will be a key part of our growth strategy going forward. We aspire to become a truly omnichannel, integrated healthcare company and are well on our way to achieving that vision,' he said.
Market dynamics
Competition in the online pharmacy space stabilised following the operational restructuring of former
market leader PharmEasy
, which last year undertook a deeply discounted rights issue – at a 90% markdown – to address its debt burden.
Additionally, the rapid medicine delivery space is also heating up with
Apollo Hospital
's pharmacy division Apollo 24/7 also expanding its offline presence — via creating micro warehouses within existing pharmacies instead of opening dark stores — to fulfil medicine orders in 19 minutes.
While 1mg is setting up its own offline stores to facilitate 30-minute deliveries in cities including Gurugram, Noida, Ghaziabad, Jaipur, Lucknow and Faridabad, it has also partnered with BigBasket in places where its outlets are not opened yet.
Quick commerce firms Swiggy Instamart and Flipkart Minutes are tying up with PharmEasy to offer 10-minute deliveries, while Zepto is setting up its own capabilities.
However, aggressive expansion of quick delivery in medicines faces multiple hurdles including it being capital-intensive and having arduous regulatory requirements.
Besides, traditional offline chemists and pharmacists have alleged that online delivery of medicines does not comply with existing laws, a claim countered by e-pharmacy firms. In the latest flashpoint, a lobby group of offline druggists has approached the
union health ministry
seeking withdrawal of a March 2020 notification that allowed doorstep delivery of medicines during the Covid-19 pandemic.
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