Tata 1mg, which is the Tata Digital-owned digital healthcare platform, has registered good financial performance in the fiscal year 2023-24, with a 21% year-over-year rise in operating revenue to ₹1,968 crore, based on regulatory filings accessed by ETtech. The Gurugram-headquartered firm also saw a big drop in net loss, with it falling to ₹313 crore from an astonishing ₹1,255 crore in the last fiscal.

This improvement in bottom-line performance has been due to both operational efficiencies and the absence of a one-time non-cash expense of ₹668 crore that was recognised in FY23 as a result of the remeasurement of a financial liability.

Revenue Growth Driven by Medicine Sales
Tata 1mg’s expansion remains driven largely by sales of pharmaceuticals, representing more than 80% of the total operating revenue. The balance represented laboratory testing services, advertising, and other ancillary revenue streams.

The firm registered a Gross Merchandise Value (GMV) of ₹2,213 crore in FY24. This, however, was accompanied by returns of ₹60 crore, discounts of ₹144 crore, and cashback coupons of ₹41 crore—a significant decrease from the ₹135 crore of cashback coupons in FY23, reflecting a strategic retreat from discount-fueled customer acquisition.

This move indicates a wider sector trend of cost rationalization on marketing spend, particularly following the experience of a funding winter and investor insistence to show routes to profitability.

Cost Savings and Operating Efficiencies
The total expense of the company declined 20% year-on-year to ₹2,303 crore from ₹2,882 crore in FY23. Most significant cost cutting areas were:

Advertising and promotion expenses, lower by 38% to ₹84 crore
Miscellaneous expenditures, which lowered by 84% to ₹129 crore
Nevertheless, people expenses increased 5% to ₹373 crore, indicating Tata 1mg’s ongoing investment in human capital as well as technology infrastructure, possibly in anticipation of its upcoming offline expansion.

These efficiencies have assisted the company in reducing losses significantly, highlighting a change of focus from hypergrowth to sustainable, unit-economics-based business growth.

Offline Expansion Plans
In June 2024, ET said Tata 1mg had won board approval for significant offline expansion, to be funded through bank borrowing instead of dilution of equity. The company’s faith in its balance sheet strength and capability to access credit at decent prices, thanks in part to the Tata brand cover, has enabled it to go down this route.

Sources privy to the information said:

1mg is not going for a fundraise externally now. They will go with debt from banks. The Tata group tag does help in getting better terms.”

This offline push will help to enhance Tata 1mg’s omnichannel reach, enabling it to fulfill the fast-growing need for in-person health and pharmacy services, especially in Tier 2 and Tier 3 cities.

Competitive Landscape: Market Share Gain from PharmEasy
The e-pharmacy segment has witnessed significant shifts in the past year. Former market leader PharmEasy underwent a massive restructuring, including a rights issue at a 90% discount, to clear its mounting debt. This reshuffle has allowed Tata 1mg to consolidate its market position, with industry data suggesting it has gained share from PharmEasy and others since late 2023.

Additionally, the price wars and discount-driven strategies that previously characterized the industry have settled down, producing a more rational and sustainable business landscape. This has further served players such as Tata 1mg that are riding on brand trust, logistics infrastructure, and service reliability at the expense of deep discounts.

Legal Boost: High Court Ruling Favors Digital Pharmacies
Tata 1mg got a legal shot in the arm in early 2025 when the Madras High Court reversed an earlier order by a single-judge bench that prohibited online pharmacies, among which are 1mg, PharmEasy, Netmeds, and Practo, from selling medicines online. The recent ruling is welcome confirmation for e-pharmacy players, providing legal clarity required for long-term business planning.

The ruling is likely to reinvigorate investor confidence, safeguard innovation in digital healthcare, and enable further growth in online pharma distribution, especially with the scaling of India’s adoption of healthtech.

From HealthKart to Tata Digital: A Strategic Evolution
Tata 1mg’s experience has been that of evolution and size. Having been a part of HealthKart, the firm was spun off in 2015, prior to a majority stake buyout by Tata Digital in 2021. The buyout placed Tata 1mg at the crossroads of pharmaceutical service, diagnostic screening, and e-health consultation, creating a very important pillar to Tata’s wider digital commerce ambitions along with BigBasket and Croma.

Today, 1mg’s services cover:

E-pharmacy (delivery of prescription and OTC medicines)
Online lab test booking
Doctor consultations
Healthcare content and wellness products
This converged model has provided Tata 1mg with a distinctive digital health ecosystem benefit, with the ability to achieve several revenue streams with relatively high repeat interactions.

Outlook: Profitability within Sight?
With better cost metrics, revenue expansion, and strong market stand, analysts are of the view that Tata 1mg could be well on its way to operational break-even in the next couple of fiscal years, subject to the offline expansion picking up pace and legal clarity persisting.

Its focus areas at present include:

Balancing margins with growth
Minimizing customer acquisition expense
Tapping Tata Group synergies
Building physical presence to reach omnichannel moments
Since the Indian pharma and healthcare delivery market is expected to expand at a CAGR of 22%+ in the next five years, Tata 1mg seems to be well-placed to ride this wave.