India’s Reliance Industries Ltd has bought a majority stake in online pharmacy Netmeds for 6.2 billion rupees (US$82.8 million), facing up to Amazon.com Inc in the competition for the nation’s fast-expanding online drug market.
The transaction gives the oil-to-telecoms conglomerate a 60 percent stake in Netmeds, which sells over-the-counter medication and more than 70,000 prescriptions drugs, Reliance said late on Tuesday.
It also follows Amazon’s move last week to start online drug sales in Bengaluru, India, and comes amid intensifying competition in the nation’s e-commerce sector, which also includes Walmart Inc’s Flipkart and a range of smaller players.
Photo: EPA-EFE
Reliance, India’s most valuable company, has raised more than US$20 billion in the past few 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, consultancy Frost & Sullivan said.
However, the growth of e-pharmacies has left many Indian trader groups feeling threatened.
They say that online drugstores could unwittingly contribute to medicine sales without proper verification, and that the entry of large players could 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,” Yash Aggarwal, legal head of South the Chemists and Distributors Association in New Delhi, said yesterday.
The group wrote to Amazon last week, opposing the e-commerce giant’s move.
Some analysts say that it could 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.”
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