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India’s E-Pharmacy Biz Shakes up as Reliance acquires NetMeds

India’s fledging and nascent online pharmacy sector has suddenly come into life of its own with Reliance Retail, owned by India’s richest man, acquiring Chennai based e-pharmacy startup NetMeds for cash consideration of Rs 620 crore.

Reliance Industries MD Mukesh Ambani

As per the terms & conditions agreed by both parties, Reliance Retail Ventures will acquire a 60% stake in NetMeds’ holding company Vitalic Health Pvt Ltd and 100% stake in its subsidiary firms Tresara Health Private Ltd, NetMeds Market Place Ltd (operates NetMeds) and Dadha Pharma distribution Pvt Ltd.

Vitalic Health’s promoters Dadha Pharmaceuticals will probably continue to hold a stake in the company post-acquisition.

The acquisition marks Reliance’s foray in the online pharmacy sector and added another business vertical into its growing e-commerce ambition. The deal has also sort of cleared the deck for Jiomart to sell medicines on its platform. Since last month there has been a growing buzz that along with medicine, Jiomart will add more verticals like fashion and electronics by Diwali.

Reliance’s emboldened e-commerce ambition is equally highlighted by the fact that it is currently in talks to acquire a slew of consumer internet startups like Milkbasket, UrbanLadder, and Zivame.

Mukesh Ambani’s foray in E-Pharmacy has come at a time when the online Pharmacy industry is witnessing heightened activities since past few weeks. The nascent industry is now waiting for CII’s approval for the merger between PharmEasy and MedLife. Additionally, Amazon’s foray and Flipkart’s impending entry has completely shaken up the once restive online pharmacy industry.

The big players’ sudden interest in the E-Pharmacy sector is surely not without a reason with India’s digital health ecosystem believed to be slated for high trajectory growth in the coming months.

According to consultancy firm Redseer, India’s current $1.2 Bn e-Health biz will grow at 68% CAGR to become $16 Bn opportunity by 2025. This growth will receive major push from government spending, with government spending likely to increase from the current 1.6% to 2.5% of the GDP.

Redseer also claims in its report that by FY25 the eHealth ready addressable market is expected to grow to $35 Bn and epharmacy’s annual GMV is likely to touch $11-19 Bn.

However, India’s online pharmacy industry faces huge challenges including regulatory problems. Regulatory problems largely pertain to the farming of e-pharmacy draft rules, which is still stuck in limbo despite hard lobbying by e-pharmacy players.

Earlier this year, FICCI claimed that the delay in framing e-pharmacy draft rules is causing anxiety among stakeholders engaged in the digital health ecosystem. But with the online pharmacy industry currently witnessing unprecedented consolidation, the Indian government may finally expedite the process.

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