RIL buys majority stake in e-pharmacy Netmeds as competition in sector heats up

Days after Amazon announced its entry in India’s e-pharmacy market, Mukesh Ambani led Reliance Industries Limited (RIL) signalled its intent to take on the Seattle headquartered ecommerce giant with the acquisition of a majority equity stake in Netmeds. 

Reliance Retail Ventures Limited (RRVL), a subsidiary of RIL, has acquired around 60% of Vitalic Health, the Chennai-based company that owns and operates Netmeds, and 100% ownership of its subsidiaries Netmeds Market Place, Tresara Health and Dadha Pharma Distribution for a  cash consideration of Rs 620 crore ($83 million according to current exchange rates), according to a filing with the Bombay Stock Exchange. 

Netmeds and Tresara Health count Sistema Asia Fund, healthcare management fund OrbiMed Asia Partners as well as Cambodia based Tanncam Investment Company and Daun Penh Cambodia Group as investors, according to data sourced from VCCEdge.

With the acquisition of Dadha Pharma Distribution, RRVL will also take over Netmeds’ wholesale drug business in Kerala and retail business in Tamil Nadu. 

The manufacturing unit of Tamil Nadu Dadha Pharmaceuticals was merged with Sun Pharma in 1996.

“This investment is aligned with our commitment to provide digital access for everyone in India. The addition of Netmeds enhances Reliance Retail’s ability to provide good quality and affordable health care products and services, and also broadens its digital commerce proposition to include most daily essential needs of consumers,” Isha Ambani, director of RRVL said in a statement. 

The acquisition adds to RIL’s omni-channel retail business  play. The company has set up business verticals including JioMart for e-commerce and Jio Healthhub for wellness among others. 

Early last month, TechCircle reported that RIL arm JioMart was acquiring Gurugram headquartered micro delivery company Milkbasket as part of its push into online grocery delivery services.

Vitalic and its subsidiaries, including Netmeds, were founded by Pradeep Dadha, a third-generation entrepreneur from the Dadha Pharma business, in 2015. Netmeds acquired clinic management platform KiVi Health in 2019 and online doctor video consultation startup JustDoc in 2018. 

“It is indeed a proud moment for Netmeds to join the 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 omni channel experience to consumers,” Dadha said in a statement. 

Separately, Temasek backed Pharmeasy on Tuesday announced 100% acquisition of rival Medlife, which will pick up 19.5% in the former, according to a filing with the Competition Commission of India. 

The e-pharmacy sector continues to operate without clarity on government regulations as the draft e-pharmacy rules have not been notified. This is despite multiple stakeholder and government consultations on the subject since 2015.

The segment recently saw the entry of Amazon India, which announced the soft launch of Amazon Pharmacy for delivery of prescription drugs earlier this month.  Flipkart is also reportedly evaluating acquisition targets in the space.