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Reliance Retail buys NetMeds, acquires majority stake in parent firm for ₹620 crore

Update on August 20: The All India Organisation of Druggists & Chemists, which has consistently opposed the functioning of e-pharmacies, has said in an open letter to Mukesh Ambani, that it is disheartening to see that Reliance invest in an industry which is illegal and not recognised under the Drugs & Cosmetics Act. 

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The online pharmacy space, which the government is yet to give regulatory certainty on, is consolidating with Reliance Industries buying a majority stake in Chennai-based online pharmacy NetMeds, and the merger of two existing e-pharmacies MedLife and PharmEasy.

Reliance’s acquisition of NetMeds

Reliance Retail has bought a 60% equity stake in Vitalic Health, the parent company of online pharmacy NetMeds, for ₹620 crore, as it moves closer to competing with e-commerce giant Amazon.

  • The deal grants Reliance Retail 100% ownership of Vitalic’s subsidiaries NetMeds Marketplace, Tresara Health, and Dadha Pharma Distribution.
  • Like Jio Platforms, Reliance Retail is a subsidiary of Reliance Industries Ltd. Over the past few months, Google, Facebook, and roughly a dozen other companies have invested in Jio Platforms.
  • Vitalic’s FY20 turnover amounted to a net loss of ₹184.3 crore, while NetMeds suffered a net loss of ₹164.15 crore. Reliance Retail will further acquire another 20% stake in Vitalic by 2024, with an option to increase it to 100% ownership.

“The aforesaid investment will further enhance affordable availability of essential quality health care products & services by the group, while furthering group’s digital commerce initiatives, with user access across all daily essential needs,” Reliance Industries said in a statement.

The announcement comes days after Amazon announced its entry into the e-pharmacy space with launch of services in Bangalore. Amazon’s entry has already been met with resistance from All India Organisation of Chemists & Druggists, a pan-India association of brick-and-mortar pharmacies. They have declared that e-pharmacies are illegal altogether since current regulations do not permit their operations.

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The government has been proposing to bring e-pharmacies into the legal fold since at least August 2018, when they released draft rules for their regulation. However, the rules are yet to be finalised, even despite the courts demanding that the government do so. This could prove to be a hurdle for Reliance Retail as well.

Reliance Retail’s flagship e-commerce venture JioMart was launched just the pandemic accelerated in the country. According to multiple reports, Reliance is also in talks to acquire furniture company Urban Ladder, milk delivery startup MilkBasket, and lingerie company Zivame.

PharmEasy and MedLife merge

Mumbai-based PharmEasy has agreed to merge with rival MedLife, according to filings with the Competition Commission of India (CCI), the Economic Times reported. MediaNama has not independently reviewed the submission. MedLife will reportedly sell 100% shares to API Holdings, PharmEasy’s parent company, in return for 19.59% ownership in the new combined entity, per the report.

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