Written by Niranjanaa Joy, Associate at Samisti Legal
Introduction
India witnessed an unprecedented track record in M&As in the HealthTech sector during a time of devastation by the COVID-19 pandemic as realization rippled through the country that orthodox practices, traditional medicines, and the Indian medical community were insufficient and lacked the edge to overcome the crisis, rather, the pandemic alarmed the nation on what was necessary: immediate technological progress and further advanced development in the healthcare and medical sector. Considering India’s dense population, the deficiencies in the healthcare sector were largely apparent when news channels reported the abysmally small number of hospital beds, medicines, white-collared staff, oxygen tanks, and, at a certain point, diagnostic testing (‘RTPCR’). The intersection between healthcare and technology, ‘HealthTech’, unlocked a platform with infinite possibilities, and investors have significantly increased capital infusion into the Indian HealthTech sector, driven by expectations of strong returns. Notably, the number of HealthTech startups in India increased by 129.2% in 2022 as compared to the previous years. This extraordinary growth trajectory had attracted major conglomerates such as Tata, Reliance, and Amazon, prompting their entry into a prime investment destination, with the aim of capturing the marketspace through a series of strategic acquisitions, mergers, and investments. The HealthTech sector underwent a significant transformation in 2021 with a wave of high-profile consolidations, including Reliance Retail’s acquisition of Netmeds, Tata Digital’s acquisition of 1mg, Walmart-backed Flipkart’s acquisition of SastaSundar, and Pharmeasy-Medlife merger. This article will delve into Tata Digital’s M&A strategy of acquiring B2C startups such as Cure.Fit, BigBasket, Karkinos, and Tata1mg. It aims to address how Tata’s strategy is different from its competitors. Whether their vision in launching a comprehensive digital ecosystem through an all-encompassing super app will triumph in e-commerce as intended? And is this a strategic decision by Tata Digital to focus on the consumption-facing end of Health tech, particularly in e-pharmacy and fitness?
Tata’s Digital Vision Post-Pandemic
The disruption in the global supply chain caused by COVID-19 had led to companies shifting their strategies to avoid depending on China as the ‘world’s factory.’ According to PwC, this wide demand-supply gap has been targeted by corporates, PEs, and SPACs, resulting in ‘a frenzied M&A activity in 2021 was fueled by high demand for technology, as well as digital and data-driven assets, as well as the resurgence of deferred deal-making from 2020.
Major conglomerates established dominance by acquiring businesses across the spectrum from B2B to B2C supply chains. The pandemic triggered a 360-degree turnaround, drawing attention to the intersection of- healthcare and technology -two of the most important sectors, which quickly transformed into investment goldmines. Technology became inseparable from daily life and was further reinforced by lockdowns that made consumers increasingly dependent on online delivery services and online retail platforms. Simultaneously, consumers adopted preventive healthcare practices, embracing home workout routines, healthy eating habits, and a renewed focus on mental and physical health. Determined from the spree of acquisitions made by Tata Sons’ digital arm on healthcare, fitness, e-pharmacy, e-grocery, and more, Tata Group’s N. Chandrasekhar had envisioned Tata to become a leading tech company and, in his book, Bridgital Nation, he has reimagined healthcare access with the advent of technology and believes that healthcare is the missing puzzle piece in the company’s portfolio. Medical and diagnostics solutions, teleconsultations, fitness, and e-pharmacy are currently under the control of Tata Medical & Diagnostics, Tata Health, and Tata Digital, respectively. Tata Group’s digital ambition to lead the retail and technology with its super-digital ecosystem alongside prioritizing healthcare with its subsidiaries, such as Tata Medical and Tata Health, had inspired the M&A team to pursue opportunities in the HealthTech segment.
Data-Driven Interests, The Broken Model Of E-Pharmacy, And Fitness Frenzy
Tata’s acquisition of BigBasket and 1mg reflected a broader vision for the future post-pandemic is not just a digital front of several brand names coming under one super app, or as they like to call it, ‘a virtual Tata Mall’ so that the customers have the advantage of shopping in one place. That is too little of a motive for Tata Digital, the most compelling narrative, as stated by the spokesperson of JM Financial Institute was that the super app is creating an ecosystem, bringing the conglomerate’s data-driven omnichannel experience to consumers across multiple channels. Before we even begin to dissect the why, how, and when of Tata’s acquisitions, the three crucial elements of data, lack of governance in the Healthtech sector, and the adoption of preventive healthcare activities are the driving forces behind these acquisitions. This section explains the intent of the giant corporation. First, the unifying theme behind digital acquisitions is data, data, and data, and healthtech is the new method of mining the valuable resource. Tata Digital, under the fancy facade of a super app, ultimately, is used to optimize its underlying assets, such as software, customer data, a delivery fleet, or fulfillment centers, just as any other digital business. Second, in the absence of a governing framework, two challenges have arisen: (1) international investors remain cautious about the e-pharma sector due to regulatory inconsistencies. Questions around whether e-pharmacies operate independently or through licensed pharma-companies, and whether they are authorized to sell via e-prescriptions, cast doubt on the sector’s legitimacy and long-term viability; (2) major conglomerates exploit the Healthtech sector by acquiring smaller enterprises, often at the cost of innovation, autonomy, and fair competition. It has fueled companies such as Tata and Reliance to topple competitors through the gray areas, owing to the lack of governance in the e-pharmacy sector that does not protect data privacy and security for data-driven interests. Third, according to the statistics provided by DataLabs Analysis by Inc42, the e-pharmacy and fitness segment has displayed steady growth in its adoption and cycle of investors’ interest. Apart from the macro-healthtech ecosystem, preventive healthcare has been the need of the hour during the pandemic. With a renewed focus, people have discarded the idea of ‘living fast, dying young’ by way of the pre-pandemic urban lifestyle of unhealthy fast-food obsessions and work-focused regimes. Instead, there is a transition to a cleaner, happier, and healthier lifestyle of prioritizing mental health and physical fitness, attracting the community towards health-focused apps.
M&A: Tata’s Team’s Strategy In Acquisitions
The pandemic served as a catalyst for HealthTech and MedTech startups, revealing significant opportunities in previously underutilized areas of the pharmaceutical sector. Being one of the largest pharmaceutical exporters, India struggled in the supply chain and sourcing of APIs during the pandemic. The timing proved particularly opportune for startups such as 1mg, whose innovative online platform emerged as a critical resource in addressing unmet healthcare needs. By the end of 2021, 1mg’s valuation tripled, and the startup owned three state-of-the-art diagnostics labs and a nationwide supply network that covered over 20,000 zip codes.
The Economic Times reported their analysis of an inorganic strategy implemented by Tata Group in which the company targeted startups for months, drove down their prices, and gained control using various financial instruments. The newest entity, Tata Digital, led by N. Chandrasekharan, purchased a majority stake in 1mg, which ultimately closed on a 51% stake for a deal amount of $230 million by the end of June. However, the M&A deal terms were vague regarding the acquisition and investment companies’ valuations, and Tata’s consequential move after the current M&As was also unknown. In 2018, 1mg had been a part of flat rounds wherein their valuation remained at $175 million until 2021, when the Tatas issued compulsorily convertible preference debentures worth INR 100 crores in a debt round. Later, INR 323 crores were invested, which were converted into optionally redeemable preference shares received by Tata. This marked Tata’s initial step toward establishing a foothold in the startup, providing stability and alleviating the capital constraints faced by the startup as it struggled to bridge the supply–demand gap. To top it all off, Tata participated in the first equity round and injected another $134 million as fresh capital for the venture and had possessed 37% of its stake before the acquisition even took place. The same pattern of using convertible financial instruments that convert into equity on achieving milestones has been implemented by Tata in the investment in Cure.Fit as well.
1mg founders and Cure.Fit founders opted to play strategically instead of choosing an independent pursuit where the small players are soon disintegrated by the major conglomerates, and the founders preferred stability and chose to side with Tata. Tata’s move of convertible financial instruments is not the only benefit; rather, the company recognizes the values and mission of the founders and allows them to lead their startups as well as be a part of the Tata family. There is trust emanating from the vision of Tata towards the start-ups.
Conclusion: Tata 1mg and Tata Neu in 2025
Tata’s M&A strategy has been noteworthy, particularly through the acquisition of two startups with strong potential in India’s Healthtech ecosystem at the consumer end. This stands in contrast to Reliance Retail’s approach, which has centered on acquiring distressed startups such as Zivame and MilkBasket at reduced valuations, alongside its $6.2 billion acquisition of NetMeds — the largest recorded M&A transaction in 2021. From a broader perspective, Reliance Retail’s entry into the Healthtech sector appears to be a late and somewhat reactive move, driven more by the need to establish a presence than by a carefully phased growth strategy.
In 2025, Tata 1mg demonstrated notable progress toward operational sustainability, with revenue growth of over 30%, reduced burn rates, and strategic expansion into offline retail and integrated care services, despite continuing net losses and ongoing regulatory scrutiny from the Drugs Controller General of India (‘DCGI’). These developments indicate a gradual but steady movement toward profitability, though compliance challenges remain a critical concern. By contrast, Tata Neu, while recovering from early setbacks in performance and user experience, has strengthened its ecosystem through product improvements and the success of its co-branded credit card. Collectively, the trajectories of Tata 1mg and Tata Neu reflect Tata Group’s broader strategy of consolidating its position in the digital health and consumer technology sectors, albeit with differing paces of maturity and risk exposure.
