Reliance Industries Ltd’s retail unit has purchased a majority stake in online pharmacy Netmeds for Rs 620 crore ($83 million) in cash, as the energy-to-telecom conglomerate continues to ramp up its digital services business.
Reliance Retail Ventures Ltd will acquire a 60% stake in Vitalic Health Pvt. Ltd. and 100% direct ownership of its units, collectively known as Netmeds, the energy-to-telecom conglomerate said in a statement.
The announcement comes just days after e-commerce giant Amazon.com Inc. started an online medicine delivery service in India. Walmart Inc.-owned Flipkart, too, has been looking to enter the e-pharmacy segment.
RIL, led by billionaire Mukesh Ambani, has been rapidly expanding its digital services business and has raised more than $20 billion for unit Jio Platforms Ltd since April from investors including Facebook Inc. and Google.
Isha Ambani, director at Reliance Retail Ventures, said the deal with Netmeds will broaden the conglomerate’s digital commerce offerings to include most daily essential needs of consumers.
Netmeds was launched by Chennai-based businessman Pradeep Dadha in 2015. Dadha's family ran Tamilnadu Dadha Pharmaceuticals Ltd, which was acquired and merged with Sun Pharmaceutical Industries Ltd in 1997.
The e-pharmacy startup had received commitments of $50 million from healthcare-focused private equity firm OrbiMed and other investors the year of its launch. It later raised funds from Russia’s Sistema Asia Fund, Cambodian investor Tanncam Investment and Southeast Asian business conglomerate Daun Penh Cambodia Group.
Consolidation in e-pharmacy?
The online pharmacy segment has raised a large amount of money from venture capital and private equity firms in recent years. But the segment is now set to see massive competition and spark consolidation with the entry of Reliance and Amazon as well as the planned entry of Flipkart.
Already, Pharmeasy, which is backed by heavyweights such as Singapore state investor Temasek and Canadian pension fund CDPQ, has made a formal move to acquire a Bengaluru-based peer, VCCircle reported earlier this month.
Another major investor-backed player in the segment is 1mg, which counts Swiss firm Corisol, Sequoia Capital, Maverick Ventures and HBM Healthcare as its investors.
These e-pharmacies have recorded a jump in their businesses as customers took to ordering online because of the coronavirus pandemic.
Notably, online pharmacies in India are functioning amid regulatory uncertainty for years. The direct sale of medicines online to end-users was banned by the Delhi High Court in December last year, putting millions of dollars invested in some of these startups at risk.