After raising funds through several bouts of stake sale in Jio Platforms, Reliance Industries is making a foray into the online pharmacy and drug delivery market by buying a majority stake in online pharmacy Netmeds, according to a report by Reuters. Reliance has bought the majority stake in Netmeds for 6.2 billion rupees ($83 million), entering into an indirect competition with Amazon.com for the country’s fast-expanding online drug market.
Through the deal, Reliance will gain a 60 percent stake in Netmeds, which sells both over-the-counter medication and more than 70,000 prescriptions drugs, informed the company. It also follows Amazon’s move last week to start online drug sales in Bengaluru, and comes amid intensifying competition in India’s e-commerce sector,
which also includes Walmart’s Flipkart and several smaller players.
Being India’s most valuable company, Reliance has raised more than $20 billion in recent months by selling stakes in its digital arm, Jio Platforms. Netmeds gives it a foothold in a sector that is forecast to grow to 250 billion rupees by 2022, according to the market research and consulting firm Frost & Sullivan.
At the same time, the growth of e-pharmacies, has left many Indian trader groups feeling threatened, who say online drug stores can unwittingly contribute to medicine sales without proper verification, and 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 tens of thousands of people employed in the pharmacy business,” said Yash Aggarwal, legal head of South Chemists and Distributors Association in New Delhi.
Writing to Amazon last week, the group had opposed 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. “It’s not a market that Reliance will be interested in unless it is a (100 or 200 billion-rupee) market.”
Although it is not doubtful that the market will grow and reach the mark sooner than expected, it will be interesting to see whether other conglomerates follow suit or not.