India’s Reliance Industries acquires local pharma business for $83 mil.

19, Aug. 2020

Photo by Fitsum Admasu on Unsplash
Photo by Fitsum Admasu on Unsplash

By Atul Ranjan

NEW DELHI, NNA - India’s Reliance Industries Ltd. (RIL)’s retail arm has acquired a controlling stake in local healthcare products and services provider Vitalic Health Pvt. Ltd. and its subsidiaries for 6.2 billion rupees ($83 million) to gain traction in the retail market.

Reliance Retail Ventures Ltd. (RRVL), the holding company of Reliance Retail Ltd., which operates RIL’s retail business, said in an announcement on Tuesday that it acquired a 60 percent holding in the equity share capital of Vitalic and 100 percent equity ownership of its subsidiaries, Tresara Health Pvt. Ltd., Netmeds Marketplace Ltd. and Dadha Pharma Distribution Pvt. Ltd.

Vitalic, established in 2015, offers pharma distribution, sales and business support services, including India’s leading online pharmacy platform Netmeds.com, which provides doorstep delivery of medicines, nutritional health and wellness products.

RIL said RRVL will further increase its equity stake in Vitalic to at least 80 percent by April 2024 with an option to increase it to 100 percent.

Reliance Retail runs a chain of neighborhood stores, supermarkets, wholesale cash and carry stores, specialty stores and online stores. As of September 2019, it operated over 10,901 stores across more than 6,700 cities.

RIL’s subsidiary Jio Platforms Ltd., a telecom and digital service provider, recently raised over $22 billion from global investors including Facebook Inc. It is working with the social media giant to develop an e-commerce business model using Facebook’s WhatsApp.

The model will allow consumers to access the nearest stores that can deliver products and services to their homes and transact seamlessly with JioMart -- Jio’s small business initiative--using WhatsApp, which has more than 400 million users in India.

Frost & Sullivan, a research and consulting firm, said in a January 2019 report that online pharmacy in India was at its nascent stage, but had the potential to be a very large industry segment in the near future as online purchase of medicines gains momentum.

It estimated the e-pharmacy market in India to be around $512 million in 2018 and said it was likely to grow at a compounded annual growth rate of 63 percent to reach $3.6 billion by 2022.

Online pharmacy sales could account for 15 to 20 percent of the country’s total pharma sales over the next 10 years, as under-served populations gain access to medicines, it said.