The Competition Commission of India (CCI), on Tuesday (September 22), approved the merger of online pharmacy Medlife with PharmEasy, the first major consolidation in the sector since the entry of big players like Reliance Industries and Amazon.
The deal will see API Holdings, the parent entity of PharmEasy, acquire 100% equity shares of Medlife, filings with the CCI show. Medlife’s promoters will in return get a 19.95% stake in the combined entity.
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 Mn across seven funding rounds and had last raised $220 Mn in November 2019. PharmEasy, which counts Temasek, Bessemer Venture Partners, Nandan Nilekani etc., among its investors, was last valued at reportedly $700 Mn. On the other hand, Medlife was founded in 2014 serving over 4,000 cities, with about $56.5 Mn being raised to date.
Medlife and PharmEasy sought CCI approval on the merger last month. Though other transactional details of the potential merger have not been revealed, media reports suggest that it could lead up to $200 Mn to $250 Mn and could value the combined entity at around $1 Bn. Recently, the South Chemist and Distributors Association (SCDA) wrote to the Competition Commission of India (CCI) claiming that the online sales of medicines are not legal under the Indian law, therefore the merger should be rejected.
They had added that there were already specific guidelines on the sales and distribution of pharmaceutical medicines and drugs, which do not mention epharmacies or online sales. These laws include Drugs and Cosmetics Act of 1940, Drugs and Cosmetics Rules of 1945, Pharmacy Act of 1948, Pharmacy Practice Regulations of 2015, Indian Medical Act of 1956 and Code of Ethics Regulations of 2002, and Drugs and Magic Remedies (Objectionable Advertisement) Act of 1954.
The merger comes at a time when giants like Reliance Retail, Amazon have entered the pharmacy space along with Flipkart planning a foray too.
After months of speculation, Reliance Retail entered the online medicine delivery space by acquiring 60% equity stake in epharmacy startup Netmeds, formally known as Vitalic Health Private Limited, for INR 620 Cr ($83 Mn).
With the acquisition, the Mukesh Ambani-led company has got the 100% equity ownership of Netmeds subsidiaries — Tresara Health Pvt Ltd, Netmeds Marketplace Ltd and Dadha Pharma Distribution Private Limited. All these subsidiaries are collectively known as Netmeds, and are in the business of pharma distribution and sales, and business support services.