Reliance Owns Majority Share in e-pharmacy Netmeds for $83 Million

On Tuesday, August 18, 2020, Reliance Industries Ltd. (RIL) announced that its subsidiary Reliance Retail Ventures Limited (RRVL) has acquired a majority equity share in online pharmacy, Netmeds for cash worth $83 million (INR 6.2 billion). Under this acquisition deal, RIL will hold a 60% share in Vitalic Health Pvt. Ltd. (Vitalic) besides taking full ownership over Vitalic’s subsidiaries namely Tresara Health Private Ltd., Netmeds Market Place Ltd., and Dadha Pharma Distribution Pvt. Ltd. Vitalic and its subsidiaries are collectively known as ‘Netmeds,’ which started incorporated in 2015.

RIL’s Investment to Compete Rivals in India

RIL’s latest investment represents a strategic move aiming at boosting its newly established e-commerce retail platform, JioMart to help compete for rivals including Amazon.com Inc. (Amazon) and Walmart-owned Flipkart (Flipkart) in the world’s second-most populous country. Adding the share of Netmeds to JioMart, RIL emerges as a big competitor to the e-commerce giant Amazon, which recently launched an online drug sales service in India.

The ongoing COVID-19 outbreak and emergency lockdown situations have brought a significant change in the habit of shopping across the globe. In a similar manner, India is witnessing the rapid surge of online shopping during the pandemic and many leading online retailers including Amazon and Flipkart have earned their fortunes in the expense of these chaotic situations. With this latest deal, RIL believes that its e-commerce platform JioMart would boost its presence in the online retail service in India.

At present, India has no final regulations regarding the online drug sales or e-pharmacies; yet, many of these online drug sellers including Medlife, Netmeds, Temasek-backed PharmEasy, and Sequoia Capital-backed 1mg reported demand surge during the pandemic. However, the emergence of various e-pharmacy platforms represents a major threat to the conventional drug stores. Meanwhile, many trader groups have argued that e-pharmacies might involve in selling drugs without proper verification or prescription.

Statements from Executives

As per the press release by RIL on Tuesday, the latest deal was the investment to enhance the availability of high quality and affordable healthcare products and services across India. Reflecting on the strategic deal, Ms. Isha Ambani, Director, RRVL, said, “This investment is aligned with our commitment to provide digital access for everyone in India… also broadens its digital commerce proposition to include most daily essential needs of consumers. We are impressed by Netmeds’ journey to build a nationwide digital franchise in such a short time and  are confident of accelerating it with our investment and partnership.”

Similarly, the founder and CEO of Netmeds, Pradeep Dadha expressed reflecting the latest deal as “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 Omni Channel experience to consumers.”

RIL, owned by Asia’s richest business tycoon Mukesh Ambani, is India’s largest private sector company, which ranked second biggest brand after Apple Inc. on the FutureBrand Index 2020. It has a consolidated turnover of 87.1 billion, a cash profit of $9.4 billion, and a net profit of $5.3 billion for the year ended March 31, 2020.

Netmeds, one of India’s leading e-pharma portals, provides a distribution of pharma products or other health-related products based on the prescription and Over the Counter (OTC) medicine service. It operates medicine delivery service over 670 cities and towns, supplies more than 70,000 prescription drugs for chronic ailments as well as enhanced lifestyle drugs, and serves over 5.7 million customers in the country. One of the key promoters for Netmeds is Dadha Pharma, a Chennai-based company, which started its first pharma retailing business and then into drug manufacturing in 1972.