The latest acquisition of a 60 percent stake in online pharmacy Netmeds for Rs.620 crore by Reliance Industries Limited (RIL) will not only strengthen its e-Commerce play, but also add significantly to the healthcare portfolio that RIL is building on the back of Jio. With a series of acquisitions in the healthcare space including Karexpert, C-Square and Netmeds, RIL will eventually integrate its brick-and-mortar presence in the segment with its tech-enabled offerings to create a bouquet of services that can be monetized through delivery, transaction-based services and subscription services.

“Reliance should have significant advantage with its large physical retail presence and should significantly expand the online medicine market in India,” says Credit Suisse in a research report. The physical presence of RIL in the segment includes the Reliance Foundation-run H.N. Reliance Foundation Hospital in Mumbai. Reliance Life Sciences (RLS), the biotechnology company from the promoter group of RIL, started the largest testing facility for Covid-19 this May, doing more than 2,000 tests per day. RLS also plans to start pathology labs across India through partnerships with local entrepreneurs.

RIL integrate its brick-and-mortar presence in the healthcare segment with its tech-enabled offerings to create a bouquet of services that can be monetized through delivery, transaction-based services and subscription services

Integrating these offline initiatives will be RIL’s Jio Health Hub app, which was launched in January 2017. The app offers lab tests and health check-ups where tests can be booked for home collection and the report is delivered directly on phone. It also allows booking doctor consultations online. “Though competition is high in this space, RIL has access to the incumbent 400 million subscriber base of Jio,” asserts BofA Securities in a research report, adding that the Indian pharmaceutical market has one of the lowest prices, making it the third largest in terms of volume and 13th largest in terms of value in the world.

The Indian pharma retail market, with a revenue opportunity of $35 billion, has three main categories –generic drugs, over-the-counter (OTC) drugs, and patented products. Generics are 70 percent of the market at $13 billion and OTC/patented drugs contribute 21 percent and 9 percent, respectively. “We estimate the domestic retail market to grow at 10-12 percent CAGR to $30 billion by 2024, driven by increasing affordability, rising healthcare awareness (and insurance) and technology-led investments to improve supply chain efficiency,” says BofA Securities.