- Mukesh Ambani’s Reliance Industries 9(RIL) is in advanced discussions to acquire a majority stake in online pharmacy Netmeds.
According to three sources familiar with the growth, Mukesh Ambani’s Reliance Industries (RIL) is in advanced discussions to acquire a majority stake in online pharmacy Netmeds as part of its broader commercial activity. The deal may see Reliance pay $130-150 million for the asset through one of its subsidiaries, which may also include a fresh infusion to boost the operations, one of the sources listed earlier said. “The offer comes at a small premium to their final value of the funding round,” the source said.
Netmeds, which began operations in 2015, has announced three rounds of funding totaling around $100 million to date. The firm was founded by Pradeep Dadha, whose family was one of Sun Pharmaceuticals’ first distributors. Sun Pharma later acquired a distribution company. The Netmeds backers include healthcare investor OrbiMed, investment bank MAPE Advisory, Sistema Asia Fund, and the Daun Penh Cambodia Group based in Singapore, in addition to Dadha’s family office.
After the coronavirus lockout, sources said, the conversations between Reliance and Netmeds, which also had talks with Walmart-owned Flipkart, had continued. It will be Reliance’s second big move in the pharmaceutical sector as it acquired 82 percent last year in C-Square Info Solutions based in Bengaluru, which makes software for pharmaceutical manufacturers, retailers, and sales force, for a total of Rs 82 crore. Some of the company’s clients include Apollo Pharmacy, Adcock Ingram, and others.
The development comes as Reliance ramps up its online-to-offline (O2O) business, first with the connection between Reliance Retail and WhatsApp last month’s grocery store. That agreement came after WhatsApp’s parent company Facebook decided to invest $5.7 billion in Jio Internet, Reliance’s telecom, and digital services business for a 9.99 percent stake.
Netmeds produces 90 percent of its sales from over-the-counter and prescription medicines. This is similar to other medicine distribution platforms such as 1MG, Medlife, and Pharmeasy which drive 80-90 percent of their revenue from selling medication, focusing on chronic customers who regularly make repeated purchases. Netmeds revealed last year that it would add a dozen new warehouses to take the total to 26, as it expanded across India. A February study from RedSeer said it has a base of 6 lakh users who transact monthly.
The e-pharma industry, including consultancy and diagnostics, is around $1.2 billion according to the RedSeer survey, a market research company. In five years, that is expected to reach around $16 billion. While over 4 million households have already opted to purchase medicine online, this room has become one of the few winners of the virus outbreak as more customers choose to purchase medicine online.