Healthtech sector in India on Tuesday witnessed another big consolidation. After Reliance’s acquisition of digital pharmacy Netmeds in August, the Competition Commission of India (CCI) on Tuesday approved the merger between online pharmacy PharmEasy’s parent company API Holdings and rival Medlife. According to an earlier CCI filing, PharmEasy will acquire 100 per cent equity shares of Medlife while the latter’s promoters will get 19.95 per cent equity share capital in return in the merged business. The two had reached out to the competition’s watchdog in August seeking approval for the merger. The merger’s approval was tweeted by CCI.
“This is basically a strategic merger with no financial involvement. PharmEasy will become a fulfilment partner for all offline stores between Medlife and PharmEasy. There won’t be a merger of management. It is spread that way to create a buzz so that investors are stimulated,” a source in the know of the development told Financial Express Online.
“The details will be out in a day or two and will be shared,” PharmEasy’s co-founder Dharmil Sheth told Financial Express Online without commenting on the deal.
Launched in 2015, PharmEasy offers services including online medicines, healthcare products and booking lab tests in more than 1000 cities. It has so far raised $328 million across seven funding rounds and had last raised $220 million in November 2019, as per deals tracker Crunchbase. PharmEasy, which counts Temasek, Bessemer Venture Partners, Nandan Nilekani etc., among its investors, was last valued at reportedly $700 million. On the other hand, Medlife was founded in 2014 and serves over 4,000 cities. The startup had raised $56.5 million.
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Digital healthcare space saw Mukesh Ambani stepping into online pharmacy segment after grocery with the acquisition of a majority stake in Netmeds by its subsidiary Reliance Retail Ventures Limited (RRVL) for around Rs 620 crores in cash. The deal gave Reliance Retail around 60 per cent stake in Netmeds and 100 per cent direct equity ownership of its subsidiaries including Tresara Health Private Limited, Netmeds Market Place Limited, and Dadha Pharma Distribution Pvt Limited.
Reliance now directly competes not just with startups such as PharmEasy, 1mg etc., but also Amazon that had also forayed into selling prescription drugs online under the name Amazon Pharmacy in August. Amazon launched the dedicated online pharmacy category to enable the sale of prescription drugs that otherwise are not possible to retail online.
E-pharmacies have been among the biggest beneficiaries of the Covid-induced lockdown as customers avoided purchase from physical stores due to safety concerns. Online pharmacies’ market last year was around $20 billion out of which the addressable medicines market share was approximately 47 per cent, according to the statistics portal Statista. This is likely to grow to more than 60 per cent by 2023 amid the rise of chronic disease treatments and ease of home delivery of medicines. Also, as per a FICCI white paper published recently, more than 50 e-pharmacies serving 3.5 million households in India before the pandemic grew around 2.5X to around 8.8 million households during the lockdown.