Health technology platform Tata 1mg steps up diagnostics play

Health technology platform Tata 1mg, one of the early movers in online diagnostics, is slowly building its presence in the space after rival PharmEasy acquired national diagnostics chain Thyrocare last year.

Tata 1mg, previously 1mg, which started its diagnostics services in 2016, now draws 15 per cent of its revenues from this vertical. Gaurav Agrawal, co-founder, Tata 1mg, said the diagnostics business was more profitable than the online pharmacy business. However, he did not share the revenue break-up and margins.

“We have a collection and logistics brand, Droplets. But slowly we are integrating our entire diagnostics offering under the Tata 1mg Diagnostics brand,” Agrawal said. He added that 20-25 per cent of the overall investments would go into building the diagnostics business. The turnover share would roughly remain at 15 per cent though.

Tata 1mg is clocking a 100 per cent growth rate in its online pharmacy business, better than the industry average of about 40 per cent. It is estimated that the online pharmacy space is around 3 per cent of the total Rs 1.6-trillion domestic pharmaceutical market.

To grow its presence in the diagnostics space, Tata 1mg is adding more laboratories — it opened its first reference laboratory earlier this week. Around 12 more routine laboratories are coming up. Agrawal explains that reference laboratories have a larger catalogue of tests and larger scale of operations compared to routine laboratories. This would enable them to add more tests to their menu and offer faster service.

It has also recently invested in digital diagnostic platform 5C Network, an AI-powered reporting platform.

Since Tata 1mg is focused on online diagnostics and home collection of samples, it has third-party partners for radiology tests. “For example, in the north, we do radiology testing through Mahajan Imaging. Third-party tie-ups, however, are a small part of our business,” Agrawal said, adding that omni-channel diagnostics centres were not an immediate priority.

Pilots, however, have started. For example, there is one integrated pharmacy and diagnostics pilot in Gurgaon where Tata 1mg has offline presence. Agrawal said it was not a necessity that online pharmacy and diagnostics should go together.

“We are trying to build a healthcare company and offer affordable and accessible healthcare services to our consumers. Therefore, we are building an integrated healthcare services firm with both online pharmacy and diagnostics,” he explained.

With rising adoption of digital healthcare, most healthtech start-ups in the space are trying to develop an integrated omni-channel business model that offers a range of services from delivering medicines to personal care products, tele-consultations with doctors, diagnostic tests, even health insurance and home healthcare.

Healthtech penetration is still quite low in India, estimated to be around 2-3 per cent of the market. The online healthcare market is estimated to be around $1.9 billion and the space is slowly getting crowded with several start-ups entering the arena. Even corporate giants like Reliance and the Tatas have entered the space, and e-commerce giants like Amazon are testing waters in the digital health space. PharmEasy, on the other hand, is coming up with an initial public offering soon.