As the wave of Coronavirus pandemic hit the world, the need for online pharmacies has grown exponentially. It has increased as much as 50 percent in the last three months as people have stayed home, practicing social distancing. Reliance Industries Limited, which has long been eyeing the growing sector has acquired a majority stake in online pharmacy Netmeds for about ($83.08 million) 6.2 billion rupees.
Pradeep Dadha, Founder & CEO, Netmeds, said, “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 omnichannel experience to consumers.”
On August 18, the cash transaction between the companies provided RIL with a 60 percent stake in the Chennai-based company Netmeds. In a midnight stock exchange filing, RIL said that it will also obtain a 100 percent direct equity ownership of Netmeds’ subsidiaries, Tresara Health, Netmeds Market Place, and Dadha Pharma Distribution.
“This investment is aligned with our commitment to provide digital access for everyone in India,” said Isha Ambani, director of Reliance Retail Ventures.“The addition of Netmeds enhances Reliance Retail’s ability to provide good quality and affordable healthcare products and services, and also broadens its digital commerce proposition to include most daily essential needs of consumers,” she added.
The news of RIL acquisition comes after the e-commerce giant Amazon launched its online prescription medicine delivery service Amazon Pharmacy in Bengaluru, India.
The total addressable medicine market for e-pharmacies in India is likely to reach USD 18.1 billion by 2023, driven by increasing internet penetration through smartphones, healthcare spends, and a rise in chronic diseases. Amazon is expected to give Reliance a stiff competition given its vast logistics network and customer reach.
While RIL and Amazon are entering the market, the rest of the established players are folding into larger rivals or being acquired. Netmeds and RIL were in advance conversation even before the pandemic, though the lockdown helped close the deal and find the right valuation.
“It is a good outcome for both sides. Netmeds needed to survive and find a home. RIL wanted to enter the sector, but not pay a very high tech-style valuation,” said an investor in the space.
PharmEasy, the market leader in the space, has explored merger and acquisition negotiations with Medlife. The deal is likely to be valued at $200-$250 million. 1mg, another player in the market, backed by investors such as Sequoia, also held acquisition conversations.
However, it is not going to be easy for RIL to tap into the segment as India is yet to finalize regulations for online drug sales, or e-pharmacies. Nevertheless, the growth of online sellers like, Medlife, now RIL’s Netmeds, Temasek-backed PharmEasy, and Sequoia Capital-backed 1mg have threatened traditional drug stores.
The deal made Netmeds the eighth company that Reliance acquired since 2017. It has fueled Reliance’s desire to have a full-fledged e-commerce platform, delivering all kinds of goods. Acquiring troubled startups has been a step in the direction. The company is reportedly in talks to acquire other e-commerce platforms such as furniture startup Urban Ladder, online lingerie retailer Zivame, and online milk delivery startup Milkbasket.