India’s Reliance Industries has acquired a majority stake for $83.08 million in online pharmacy Netmeds.
The move comes just days after an online drug sales service, ‘Amazon Pharmacy’ was unveiled by e-commerce company Amazon in India.
The oil-to-telecoms conglomerate has explained that after the deal, which was transacted in cash, it holds 60% stake in India’s Vitalic Health Pvt Ltd and 100% direct ownership of its subsidiaries.
The conglomerate commented that the acquisition strengthens the capacity of Reliance Retail to offer affordable healthcare products and services, and is also in line with its plans to broaden digital commerce and meet the everyday essential consumer needs.
Collectively known as Netmeds, Vitalic and its subsidiaries were incorporated in 2015. They are in the pharmaceutical distribution, sales and business support services market.
Netmeds connect customers to pharmacists and enables medications, nutritional health and wellness products to be delivered at the customer’s doorstep. It had achieved an impressive growth in the country in a very short period.
Reliance Retail had teamed forces with Netmeds earlier in May to deliver groceries from JioMart, its online retail store.
The COVID-19 crisis, which sparked a surge in online shopping, has led to intensified rivalry between Amazon, Walmart-owned Flipkart, the upstart online grocery service from Reliance – JioMart and a host of other smaller players for a share in the world’s second most populated nation.
In India, e-pharmacies is a large market but a fragmented retail segment which makes it ideal for restructuring.
Further, the addressable medicine demand for e-pharmacies is projected to hit $18.1 billion by 2023 from $9.3 billion in 2019, according to an EY survey.
India is yet to finalize online drug sales regulations, or e-pharmacies, but online sellers such as Medlife, Netmeds, Temasek-backed PharmEasy, and Sequoia Capital-backed 1 mg are threatening traditional drug stores with their growth.
Most trader groups are against e-pharmacies, arguing that this will lead to drugs being sold without proper screening.