Mumbai: Reliance Industries Ltd has bought a majority stake in online pharmacy ‘Netmeds’ for Rs 620 crore ($83 million). Reliance Industries have done so to expand its online drug market in India. Reliance has been facing huge competition from Amazon.com in the sector
The deal will give the oil-to-telecoms conglomerate a 60% stake in ‘Netmeds’. The latter sells both over-the-counter medication and more than 70,000 prescriptions drugs, Reliance said here late Tuesday. The development follows Amazon’s move last week to start online drug sales in Bangalore. The acquisition comes amid intensifying competition in India’s e-commerce sector, which also includes Walmart’s Flipkart and a range of smaller players.
Reliance, the most valuable company in India has raised more than $20 billion in recent months. It has done so by selling stakes in its digital arm, ‘Jio Platforms’.
‘Netmeds’ gives Reliance a foothold in a sector that is forecast to grow to 250 billion rupees by 2022. The forecast has been made by consultancy firm Frost & Sullivan.
The growth of e-pharmacies, however, has left many Indian trader groups feeling threatened. They say online drugstores can unwittingly contribute to medicine sales without proper verification. They have also asserted that the entry of large players can cause unemployment in the industry.
“It is not only about the pharmacies. It is also about the back end. There are thousands of people employed in the pharmacy business,” Yash Aggarwal said. Aggarwal is the legal head of South Chemists and Distributors Association in New Delhi, said Wednesday.
The group had written to Amazon last week, opposing the e-commerce giant’s move. Some analysts say it may be a while before ‘Netmeds’ can become a significant business for Reliance.
“They’ll have to really focus on building scale,” said Deepak Shenoy, founder of wealth manager Capitalmind and an investor in Reliance.
“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. It also broadens its digital commerce proposition to include most daily essential needs of consumers,” Reliance Retail Ventures Limited (RRVL) director Isha Ambani said.