Menu
KrASIA
News

Reliance and Amazon to rejig power balance in India’s online pharma sector

Written by Moulishree Srivastava Published on 

Share
Reliance Retail has acquired a majority stake in Netmeds for USD 83 million.

India’s nascent online pharmacy sector is all set to become a battleground as bigwigs like Reliance, Amazon, and Walmart-owned Flipkart rush to tap the rapidly growing demand for home delivery of medicines and healthcare products, while consolidation among the incumbents begins.

On Tuesday, Reliance Industries, owned by the world’s fourth-richest person Mukesh Ambani, said its retail arm, Reliance Retail, has acquired a majority equity stake in Vitalic Health Pvt. Ltd, the parent company of digital pharmacy marketplace Netmeds for USD 83 million.

The transaction gives Reliance Retail 60% shareholding in Vitalic and 100% direct equity ownership of its subsidiaries, which include Tresara Health Private Limited, Netmeds Market Place Limited, and Dadha Pharma Distribution Pvt Limited.

Founded in September 2015, Vitalic and its subsidiaries have businesses ranging from pharma distribution, sales, and business support services to online pharmacy platform Netmeds, which connect customers to pharmacists and enable doorstep delivery of medicines, nutritional health, and wellness products.

Reliance Retail said it will “further acquire equity in Vitalic, through a mix of secondary purchase and primary investment, for at least 80% stake by April 2024, with an option to increase to 100% ownership.”

“This investment is aligned with our commitment to provide digital access for everyone in India,” said Isha Ambani, director, Reliance Retail, and daughter of Mukesh Ambani, in a statement. “The addition of Netmeds enhances Reliance Retail’s ability to provide good quality and affordable health care products and services and also broadens its digital commerce proposition to include most daily essential needs of consumers.”

Read this: Reliance gears toward its second round of acquisition spree

This comes at a time when the Indian arm of American e-tail giant Amazon has also started its online pharmacy service in the country. The Seattle-headquartered company last week rolled out ‘Amazon Pharmacy’ in Bengaluru, to sell and deliver over-the-counter and prescription-based medicines.

“This is particularly relevant in present times as it will help customers meet their essential needs while staying safe at home,” an Amazon spokesperson said in a statement.

Meanwhile, homegrown e-retailer Flipkart, which was acquired by American retail giant Walmart in 2018, is reportedly looking to get into the online pharmacy segment. Earlier this week, a report by local media Times of India (TOI), citing sources, said, Flipkart is in the process of building an internal team to handle digital pharmacy. While the Bengaluru based company is engaged in early-stage partnership talks with medicine ordering app PharmEasy, it is also looking to acquire e-pharmacy firm Medlife, the report added.

However, in turn of events, PharmEasy and Medlife have joined hands for a merger so as to safeguard their market share against the bigwigs eyeing the digital pharmacy sector.

According to a report by local media Economic Times (ET), Medlife has agreed to sell 100% shares to API Holdings, the parent entity of PharmEasy, in return for 19.59% ownership in the combined entity, according to the filing with the Competition Commission of India (CCI). This marks the first big consolidation in the sector.

The deal pegs the valuation of the combined entity at USD 1.2 billion, with the stake of Medlife at around USD 235 million, the report said citing sources.

This essentially means that Flipkart will have to move fast, as its arch-rival Amazon India and Reliance-owned JioMart have already forayed into the potentially next big sector.

Startup

Read this: Amazon now delivers medicine to Indians’ doorstep

The healthcare pandemic and subsequent lockdown earlier this year have given a major boost to home delivery of essential services which include medicines. Although, it wouldn’t be easy for new entrants to break into this space as it will compete with existing incumbents such as 1Mg, Practo, among others. Apart from these e-pharmacy startups, Swiggy and Google-backed Dunzo have also entered this space by partnering with medicine stores.

According to a last year report by London-based consulting firm Ernst & Young, e-pharma players are expected to attain a combined market size of USD 2.7 billion by 2023 from about USD 360 million in 2019. The report also added that the total addressable medicine market for e-pharmacies is likely to reach USD 18.1 billion from USD 9.3 billion in the same time period.

India at present does not have clear regulations for online sales of medicine. A local body for offline medicine retailers, All India Organisation of Chemists and Druggists (AIOCD), has complained against Amazon’s entry in the digital pharmacy market. In a letter addressed to Amazon founder Jeff Bezos and India’s Prime Minister Narendra Modi, along with other top ministers and government officials, AIOCD said Amazon India is operating “illegal e-pharmacy” and that it is amply clear that home delivery cannot be undertaken by any online pharmacy and entities doing so are already facing contempt of court proceedings in India.

Last year, a draft regulation by India’s Health Ministry said online pharmacy companies can’t keep an inventory of medicines and must partner with local medicine shops to facilitate home deliveries. This means Amazon wouldn’t be able to maintain an inventory of medicines and may have to change its delivery model which is currently inventory-led.

Share

You might like these

  • News

    Halodoc launches online vet consultation, more services to come: CMO

    By 

    Ursula Florene

    04 Nov 2020    02:03 AM

KrASIA InsightsKrASIA Insights

  • In the next 18 to 24 months, ProfitBoard Ventures plans to invest in 100 startups across India and Southeast Asia through its USD 100 million fund.

    Q&A

    Singapore startups should experiment in India, VC says

    By Moulishree Srivastava

    30 Nov 202001:05 AM

Most PopularMost Popular

See All