The deal grants 100 percent ownership of Vitalic’s subsidiaries- Netmeds, Tresara, and Dadha Pharma. The parent organization is valued at nearly $134 million
Reliance Industries is trying to make it big in the retail sector. Earlier, the company launched its own online retail business, called JioMart. Now it has bought a 60 percent stake for $83.2 million in online pharma business Netmeds.
The deal is part of Reliance’s idea to expand into categories of online retail. The company will be able to compete directly with its competitors, like Amazon, who is now providing groceries to pharma at hyper delivery speed.
The Netmeds deal
According to Reliance Retail, the deal grants 100 percent ownership of Vitalic’s subsidiaries — Netmeds, Tresara, and Dadha Pharma. The organization is valued at nearly $134 million. Netmeds, an online pharma delivery company, connects consumers with pharmacists online. Over 5.7 million customers in 670 Indian cities and towns use the services for doorstep delivery of medicines.
Netmeds offers more than 70,000 prescription drugs for chronic and recurring ailments. The site also offers enhanced lifestyle drugs and thousands of non-prescription drugs for health, personal care, and wellness.
To date, Netmeds has raised more than $99 million. Reliance Retails is in plans to expand its ownership of parent organization Vitalic by up to 80 percent by April 2024, and holds the right to own 100 percent.
“This investment is aligned with our commitment to provide digital access for everyone in India. 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,” said Isha Ambani, director of Reliance Retail.
The Indian government hasn’t finalized regulations for the online sale of drugs or e-pharmacies. However, online sellers such as Netmeds, Medlife, PharmEasy, and Sequoia Capital-backed 1mg have become popular, they are now threatening traditional drug stores.
Increased competition
Big giants in the online pharma business have heightened competition. Existing players are trying to fight the giants for their survival. PharmEasy has proposed merging with its rival Medlife, according to a joint filing with the anti-trust regulator Competition Commission of India (CCI).
Mumbai-based PharmEasy has a valuation of more than $700 million while Bengaluru-based Medlife is valued at $ 450 million as of June. The merger will create a giant pharma delivery company worth over $1 billion.
The COVID-19 impact
During the lockdown, the e-pharmacy sector has grown swiftly due to the urgent need of medicine for people. More people started using these services than ever before. After edtech and e-commerce platforms, e-pharmacy has performed overwhelmingly well during the lockdown period.
Further, according to various market reports, India’s eHealth market will grow swiftly over the next five years to touch $16 billion. At present, the market is valued at $1.2 billion. While the online pharma market stood at $360 million in 2019; will grow to touch $2.7 billion in 2023.
Amazon Pharmacy
Last week, e-commerce giant Amazon announced the launch of Amazon Pharmacy, Amazon’s entry into the online pharma market. Under the program, Amazon India started pilot programs in Bengaluru.
However, the move upset the All India Organization for Chemists and Druggists (AIOCD). The organization wrote a letter to Amazon founder and CEO Jeff Bezos calling the launch of the program illegal. Letter copies were also sent to Prime Minister Narendra Modi and significant government officials.
Reliance eyes more acquisitions
“It is indeed a proud moment for ‘Netmeds’ to join Reliance family and work together to make quality healthcare affordable and accessible to every Indian. With the combined strength of the group’s digital, retail and tech platforms, we will strive to create more value for everyone in the ecosystem, while providing a superior Omni Channel experience to consumers,” said Pradeep Dadha, founder and chief executive of Netmeds.
Reliance plans to acquire online furniture business Urban Ladder, Bengaluru-based lingerie company Zivame; milk delivery start-up MilkBasket. TikTok is in talks with Reliance Industries to sell its Indian operations.