Tata Group is planning to step in the online pharmacy sector with ongoing talks to purchase a large stake in the Gurgaon-based 1mg, in light of the rapid growth of the e-pharmacy sector resulting from the Covid-19 outbreak.
In August, Reliance Retail, a subsidiary of India’s largest business conglomerate Reliance Industries, acquired a 60% stake in Vitalic, the parent company of Chennai-based online pharmacy startup Netmeds, in a deal valued of about Rs 620 crore.
If the deal with the American based Sequoia-Capital backed company 1mg is finalized, it could significantly change the face of the thriving e-pharmacy industry in India, with 2 of the countries biggest business conglomerates armed to face-off for the biggest chunk of action in the pharma market.
Reliance entry in the e-pharmacy sector is aligned with Amazon’s decision to model a Bengaluru based prescription drug delivery service in partnership with Cloudtail. Amazon has a 24 percent stake in the parent company Cloudtail. The strategic investments in India’s online pharmacy sector have set off a wave of consolidation, with Mumbai-based Pharmeasy — backed by Temasek, CDPQ and Orios Venture Partners — entering into a deal to merge with its smaller Bengaluru-based rival Medlife.
The Gurugram-based 1mg, Pharmeasy, Netmeds and Medlife are the four largest online pharmacies in the country and have offered a range of services to secure a stronger consumer base with online lab testing, doctor consultations, and even insurance claims management services. They also developed a portfolio of private label products in the nutrition and supplements category. The e-pharmacy industry witnessed a blow post the imposition of COVID-19 lockdown, which was followed by a boom post the government’s recognition of the importance of the sector, with sales almost doubling in the initial months.
Post the initial slump in the, according to Frost & Sullivan, e-pharmacies made inroads into about 9 million households in the country due to the lockdown, and the sector was expected to reach 70 million households by 2025, expanding to over 75 companies.