According to the sources familiar with the development, Mukesh Ambani’s Reliance Industries is in advanced discussions to acquire a majority stake in online pharmacy Netmeds as part of its broader play in commerce, said three.
What Is The Plan?
The mentioned sources said that the deal may see Reliance, through one of its subsidiaries, pay $130-150 million for the asset, which may also include a fresh infusion to expand the operations.
Further, the sources said, “The deal is happening at a slight premium to their last funding round valuation,”.
So far Netmeds has announced three rounds of funding totaling about $100 million since its operations started in 2015.
Basically, the company was started by Pradeep Dadha, whose family was one of the first distributors for Sun Pharmaceuticals.
Later on, the distribution business was acquired by Sun Pharma.
Apart from Dadha’s family office, the Netmeds backers include healthcare investor OrbiMed, investment bank MAPE Advisory, Sistema Asia Fund and Singapore-based Daun Penh Cambodia Group.
What Does Reliance Say About This Development?
While talking about the subject, a Reliance spokesperson said, “As a policy, we do not comment on media speculation and rumors. Our company evaluates various opportunities on an ongoing basis,” further adding that it will inform exchanges according to Sebi on any developments.
in an emailed response, Dadha said, “It would not be productive to comment on media speculations at this stage,” while adding that Netmeds has tied up with Reliance Retail for supplying essentials like groceries to its customers.
According to sources, the conversations between Reliance and Netmeds, which had also held talks with Walmart-owned Flipkart, had been going on before the coronavirus lockdown.
So far, this can be considered as second major move by Reliance in the pharma sector as last year it acquired 82% in Bengaluru-based C-Square Info Solutions, which makes software for distributors, retailers and sales force in the pharma sector, for a total of Rs 82 crore.
Also, some of the clients of the company include Apollo Pharmacy, Adcock Ingram and other players.
Last month, the development comes as Reliance is ramping up it’s online-to-offline (O2O) commerce business, first with grocery with the tie-up between Reliance Retail and WhatsApp.
Further, that deal came after WhatsApp’s parent company Facebook agreed to invest $5.7 billion for a 9.99% stake in Jio Platforms, the telecom and digital services business of Reliance.
What About Netmeds?
Currently, Netmeds generates 90% of its revenue from prescription medications and over-the-counter drugs.
Moreover, this is similar to other medicine delivery platforms like 1MG, Medlife and Pharmeasy who drive 80-90% of their revenue from selling medicine, focused on chronic customers who make repeat purchases regularly.
Netmeds last year announced that it would add a dozen new warehouses to take the total to 26 as it expanded across India.
According to a RedSeer report, in February it has a base of 6 lakh monthly transacting users.
Further, the RedSeer report sais that a market research firm, the e-pharma industry, including consultancy and diagnostics, is about $1.2 billion.
it is expected to reach about $16 billion in five years.
So far, over 4 million households were already opting for buying medicine online, this space has become one of the few beneficiaries of the virus outbreak as more consumers are opting to buy medicine online.
Also, by the middle of March, e-pharmacy platforms saw a strong spike in sales of masks and sanitizers.
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