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Amazon mulls USD 100 million investment in Indian pharmacy chain Apollo

Written by Moulishree Srivastava Published on 

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Amazon rolled out its online medicine delivery service, Amazon Pharmacy, in India in August eyeing the country’s booming e-pharmacy market.

Amazon India is mulling over writing a USD 100 million check for Indian pharmacy chain Apollo Pharmacy as it looks to level up its online medicine delivery play in the world’s second-most-populous country.

If the deal goes through, it will allow the Seattle-headquartered company to sell and deliver medicines from Apollo’s 3,700 pharmacies throughout India, local media Economic Times reported, citing two sources familiar with the development.

Over three-decades old, Apollo Pharmacy is the largest pharmacy chain in India in terms of walk-in customers. Present in over 600 cities, its revenue in FY20 stood at over USD 700 million. It is closely followed by MedPlus, which has 1700-plus offline pharmacies across 300 cities that clocked USD 300 million in revenues in the last fiscal year.

With COVID-19 accelerating the adoption of services across healthcare, e-pharmacy market has heated up over the last six to nine months. While Amazon kicked off its online medicine delivery service with the launch of Amazon Pharmacy in India in August, Reliance Retail, the retail arm of Reliance Industries, owned by Asia’s richest person Mukesh Ambani, acquired a majority equity stake in Vitalic Health Pvt. Ltd, the parent company of digital pharmacy marketplace Netmeds for USD 83 million.

At about the same time, two other significant players in the segment, PharmEasy and Medlife also joined hands for a merger to safeguard their market share against the bigwigs eyeing the digital pharmacy sector. In a deal that pegged the valuation of the combined entity at USD 1.2 billion, Medlife agreed to sell 100% shares to API Holdings, the parent entity of PharmEasy, in return for 19.59% ownership in the merged entity. Furthermore, according to media reports in October, PharmEasy has been in talks with South African tech and media giant Naspers and American investment firm TPG Capital to raise USD 100 million from each of them to fill its war chest against the new, deep-pocketed entrants in the segment.

Meanwhile, USD 113-billion salt-to-software conglomerate, Tata Group, is also ramping up its efforts to grab a larger pie of the Indian e-commerce market, including the nascent online medicine segment. The Indian giant is reportedly looking to scoop in a majority stake in a leading e-pharmacy player 1mg.

According to Bengaluru-based consulting firm Redseer, the Indian e-health sector is expected to reach USD 2 billion in gross merchandise value (GMV) by March 2021. GMV indicates the total value of merchandise sold on an online platform and does not factor order cancellations. By the financial year 2025, the e-health players may clock an annual GMV of up to USD 19 billion. Of this, e-pharmacy, alone, is likely to reach a GMV of USD 13.3 billion by FY 2025.

Overall, 90% of the Indian pharma market is unorganized which is pegged at USD 25 billion. Online players account for 35-40% of the total organized market which is valued at USD 2-2.5 billion, RedSeer report said.

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