India’s online pharmacy space is expected to see a wave of consolidation, triggered by Reliance Industries’ reported acquisition of Chennai-based Netmeds, with global investors also lining up to back the winners in the fast-growing sector.Reliance’s yet-to-be announced acquisition of Netmeds for an estimated $120 million is a catalyst for other players such as PharmEasy and Medlife to explore merger and acquisition negotiations, multiple sources told ET.The Mumbai-based PharmEasy – backed by Temasek, CDPQ and Orios Venture Partners – could acquire its Bengaluru-based rival in a primarily stock deal valued at $120-150 million, the sources said.Multiple global financial investors, including US private equity firm TPG which has a strong healthcare focused portfolio, could also invest in the combined entity if the merger goes through.”Like what took place in the horizontal ecommerce space, where Flipkart and Amazon came out as winners while others fell by the wayside, the same will take place in the online pharma space. Reliance’s entry will give a difficult time to the other players,” an investment banker told ET on condition of anonymity. 77341832The sources declined to speak on record, as they are either part of the ongoing negotiations or have been briefed on the developments.”PharmEasy has always been strong in the western part of India, while Medlife has had a good presence in the South. So, consolidation makes sense, because you need deep pockets to compete with Reliance,” a second source said.Temasek’s investment in PharmEasy, which ET first reported in August last year, values the company at $600-700 million, giving it a substantial war chest to finance its buyouts. “It would be good if a few players fold and merge into each other or with larger players…,” said the CEO of an e-pharmacy firm on condition of anonymity.Medlife and TPG declined to comment, while PharmEasy did not respond to emails till the time of going to press. Additionally, 1mg is also believed to have held exploratory talks with PharmEasy for a potential acquisition. The company, according to the sources cited earlier, is also looking to raise fresh funding. Prashant Tandon, CEO of 1mg, did not respond to ET’s email seeking comment. The company, along with prominent startups like Curefit, Practo and Policybazaar, is also reportedly playing a critical role in stitching together a telemedicine alliance that is part of the Bharat Health Stack, a technology stack being created to digitise patient data and records for hospitals and doctor consultations.The Swasth Alliance, in turn, is being seen as the third faction that could dominate India’s online pharma and drug delivery space, alongside the Reliance-Netmeds and PharmEasy-Medlife combines, sources indicated.

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