Home >Companies >News >PharmEasy to merge with rival Medlife to create $1bn entity
Much like e-commerce marketplaces, dominated by the duopoly of Flipkart and Amazon, a spate of mergers and acquisitions in both e-health and edtech may see the rise of a few, strong companies Photo: Mint
Much like e-commerce marketplaces, dominated by the duopoly of Flipkart and Amazon, a spate of mergers and acquisitions in both e-health and edtech may see the rise of a few, strong companies Photo: Mint

PharmEasy to merge with rival Medlife to create $1bn entity

The proposed merger indicates early signs of consolidation in the e-pharmacy segment, which along with edtech platforms outperformed most startups during the lockdown period.

Bengaluru: Online medicine and healthcare products retailer Pharmeasy has proposed a merger deal with its rival Medlife, according to a joint filing with anti-trust regulator Competition Commission of India (CCI).

The proposed merger indicates early signs of consolidation in the e-pharmacy segment, which along with edtech platforms outperformed most startups during the lockdown period.

Much like e-commerce marketplaces, dominated by the duopoly of Flipkart and Amazon, a spate of mergers and acquisitions in both e-health and edtech may see the rise of a few, strong companies.

If the merger goes through, Pharmeasy will acquire a 100% stake in its smaller rival Medlife, while the latter is also expected to pick up a 19.59% stake in Pharmeasy, according to the filing.

Mumbai-based Pharmaeasy was last valued at $700 million in a round led by Temasek Holdings in November, 2019 whereas Bengaluru-based Medlife was valued at $450 million as of June, 2019, according to estimates from venture capital investment tracker Tracxn. The combined entity is likely to be valued at $1.15 billion.

The lockdown and social distancing prompted customers to move to online consultation, treatment, medical tests and medicine delivery. Healthcare startups Practo, NetMeds, 1mg, PharmEasy and Medlife are witnessing a huge surge in demand and a spurt in funding activity.

The online pharmacy sector is expected to see a spurt in acquisitions, as multiple large players are looking to enter the segment. Amazon India launched ‘Amazon Pharmacy’ in Bengaluru last week and will conduct pilots in other cities. Reliance Retail—through its SMART Point outlets—plans to scale up its grocery and pharmacy platforms. Reliance Industries Ltd has been in discussions with startups across sectors for potential acquisitions or stake buys. It is reportedly in talks to buy a majority stake in Chennai-based online pharmacy Netmeds.

Last week, Amazon India launched Amazon Pharmacy, marking its entry into the online medicine segment, and kick-starting pilots in Bengaluru to begin with.

This foray by the e-commerce firm saw a push back by the All India Organization of Chemists and Druggists (AIOCD), which wrote a letter to Amazon Inc’s chief executive officer Jeff Bezos calling the launch illegal. Copies of the letter were also marked to Prime Minister Narendra Modi and other government officials.

It is just a matter of time before e-commerce major Flipkart ventures into this sector.

According to RedSeer Consulting, India’s digital health market will expand to $4.5 billion in the current financial year, compared to $1.2 billion in FY20.

With behemoths like Amazon and Reliance entering the sector, government authorities may finally look to notify the e-Pharmacy Draft Rules soon without which a clear regulatory framework is still missing. There are reportedly more than 50 e-pharmacy platforms in the country, which have been pushing the government to notify these draft rules.

The proposed merger of PharmEasy and Medlife comes shortly after the Health Ministry in December 2019 put out a set of guidelines regulating sales of drugs online.

Analysts said the e-pharmacy a segment is still in its “early" days with many tech startups such as Mfine, Practo, 1mg beginning to stack up different healthcare services into a single app.

“…From 2015, tech startups disrupted healthcare space by either offering online doctor appointments, or medicine deliveries. However with big players (like RIL and Amazon) coming in, and as regulations around online healthcare and e-pharmacies ease up, the segment will come out with more innovative business models," said a lawyer who works with online healthcare firms, asking not to be named.

The person added that “next stage of growth" for online healthcare will arise from nice segments such as oncology care, diabetes management, nutrition management, and wellness.

E-pharmacies are also expected to enter some niche segments in the near future in order to add bring more users to its platform, the person quoted above said.

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