India’s competition regulator has sanctioned the merger of online pharmacy Medlife with its greater rival PharmEasy, which is majorly the first consolidation play in the sector. The deal will see API holdings, acquire 100% equity shares of Medlife, the parent entity of PharmEasy and filings with the CCI show (Competition Commission of India). The advertisers of Medlife, will get a 19.95% stake in the combined entity. This strategic merger has no financial involvement. PharmEasy will become a fulfilment partner for all offline stores between Medlife and PharmEasy. There won’t be a merger of management. The proposed merger of PharmEasy and Medlife was first reported in August when a joint application was made by the two firms to the CCI. Launched in 2015, PharmEasy offers services including online medicines, healthcare products and booking lab tests in more than 1000 cities. It has so far raised $328 million across seven funding rounds and had last raised $220 million in November 2019, as per deals tracker Crunchbase. PharmEasy, which counts Temasek, Bessemer Venture Partners, Nandan Nilekani etc., among its investors, was last valued at reportedly $700 million. On the other hand, Medlife was founded in 2014 and serves over 4,000 cities. The startup had raised $56.5 million

The valuation of the combined entity would be around $1.2 billion, which would value the stake held by Medlife’s shareholders in API Holdings at around $240 million. Mukesh Ambani stepped into the online pharmacy segment after grocery with the possession of a majority stake in Netmeds by its subsidiary Reliance Retail Ventures Limited (RRVL) for around Rs 620 crores in cash. 

The approval comes over a month after Reliance Retail acquired 60% stake in Chennai-based Vitalic, parent company of Netmeds, for approximately Rs 620 crore. Reliance also got 100% ownership of Netmeds’ subsidiaries, Tresara Health, Netmeds Market Place and Dadha Pharma Distribution. Reliance now directly competes not only with startups such as PharmEasy, 1mg etc., but also Amazon that had also plundered into selling prescription drugs online under the name Amazon Pharmacy in August. Amazon launched the dedicated online pharmacy category in order to enable the sale of prescription drugs that otherwise are not possible to merchandize online. The company is operating with its largest seller Cloudtail to sell medicines, which will require customers to upload a photo of their prescription in order to get them delivered home.

E-pharmacies have been among the biggest beneficiaries of the Covid-induced lockdown as customers avoided purchase from physical stores due to safety concerns. Online pharmacies’ market last year was around $20 billion out of which the addressable medicines market share was approximately 47 per cent, according to the statistics portal Statista. This is likely to grow to more than 60 per cent by 2023 amid the rise of chronic disease treatments and ease of home delivery of medicines. Also, as per a FICCI white paper published recently, more than 50 e-pharmacies serving 3.5 million households in India before the pandemic grew around 2.5X to around 8.8 million households during the lockdown. PharmEasy was valued at around $700 million when it closed a $220 million funding round led by Singapore’s Temasek in November last year. It is as yet unclear if the transaction between Medlife and PharmEasy a purely stock-swap deal.

This news has been reported by Ms. Roshni Kapur & reviewed by Ms. Samreen Ahmed, Research Assistant, Research & Innovation Department, MyLawman.