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Amazon looks at India’s Pharmacy market, potential investment in Apollo Pharmacy; move in to call out Reliance and Tata Group

Amazon, the world’s largest e-tailer, in a move to consolidate its position in India’s pharmaceutical market, launched its online pharmacy – Amazon Pharmacy, rolled out in Bengaluru currently – is assessing a potential investment in India’s largest branded pharmacy chain, Apollo pharmacy.

Amazon, according to sources, is looking at an investment of nearly $100 million, Rs 737 crore. 

Amazon.com Inc had in the month of August launched its online pharmacy, Amazon Pharmacy, in Bengaluru that allows customers to buy home medical supplies, prescription medication, supplements, ayurvedic medicines, and healthcare devices, among others and have then delivered at home.

The requirement for the same, according to its website, is for the customers to upload the medical prescription and have the requirement delivered at home.

In the current move, the deal with Apollo, if it goes through, Amazon will have access to all of Apollo’s front – end pharmacy business. Apollo has more than 3,700 outlets across the country that have home delivery services available to its customers. 

The deal and investment with Apollo will help Amazon integrate the different shopping methods – an omnichannel model – whereby it can directly pick up from the retail stores of Apollo and deliver to customers.

The deal will also help Amazon get a significant foothold in the growing e – pharmacy market and give stiff competition to its rivals, both Reliance and the Tata Group, which are also looking to enter the market.

Reliance Industries had acquired a majority stake in Netmeds in August 2020 and saw this as an opportunity to further its stake in an already successful e – pharma business model in India.

Meanwhile, Tata Group is supposedly in talks with e – pharmacy firm 1mg to pick up a majority stake in the latter. 

Reportedly, one of the largest e – pharma providers in India, PharmEasy, is also awaiting the prospective merger with its biggest rival, Medlife. 

Also, Walmart owned – Flipkart, post the entry of Amazon Pharmacy, is also looking to make its debut in India.

Amazon would be looking to model the potential investment in Apollo Pharmacy on the similar lines of its earlier stake purchase in the retail sector with retail chains such Future Coupons and Shoppers Stop, where the e-commerce giant had also acquired a minority stake and exclusive rights to list of products from these retailers on its platform.

Amazon’s expansion into online pharmacy – US and India – a big market for Amazon

Amazon has been eyeing the delivery medications business since 2018 after it acquired drug delivery startup PillPack in the US.

Amazon, since then, has been pushing into healthcare and has now consolidated its move in India by launching the same in one city and pushing for the same across the country.

India already has big players like PharmEasy, Medlife, and NetMeds – that have similar dedicated e-commerce platforms and have been fighting for supremacy. 

According to Frost & Sullivan, India’s e-commerce pharma market is expected to touch $3.7 billion by 2022.

The market for online ordering and delivery of medicines has further increased following the Covid -19 pandemic, and the E – Pharmacies saw a massive boom in orders and also first – time customers so much so that it struggled to meet the surge in demand initially.

In order to outdo each other, the online pharmacy market has also been offering deep discounts to its customers; as per data currently in India, they are as many as 245 e – pharmacy startups in the country. 

Amazon, to tackle the competition, is already offering discounts of a flat 50% on all its pharmacy platforms.

According to an E&Y report, the e – pharma players are expected to attain a combined market size of US$ 2.7billion by 2023; However, this report came in May 2019, with the Covid -19 pandemic, this market now has enormous potential not only in India but all across the world.

The Indian e – pharmacy market is in a nascent stage as compared to the rest of the world. But it is also one of the fastest-growing sectors primarily due to the high cell phone usage and penetration even in smaller towns.

With the Covid -19 pandemic in full swing, it has upped the stake for many e – pharma companies, and Netmeds and PharmaEasy, both took advantage of the current market trend by providing e -consultation services and also offering heavy discounts to their end customers. 

For investors, e – pharma is also a lucrative segment because it offers a strong value proposition and considerable long–term gains. 

Notably, ease of access, and due to social distancing norms, the comfort of access to medicines is crucial, especially for chronic patients. India being the second highest in terms of diabetic patients in the world, and other chronic patients, 60 – 70 % of medicine order volumes were and from chronic patients across most e- pharma platforms. 

However, due to a lack of clarity on the regulatory landscape and lower consumer awareness, the sector did not see and attract more significant investments, but the industry is now poised for major change.

Future of E – Pharmacy market

In the near future, the e- pharmacy market is expected to have a market consolidation. 

With bigger International players and the largest companies in India also ready to join and claim a piece of the pie, it is one of the sectors that is expected to see major expansion. 

To consolidate their respective positions in the e – pharma market, it is expected that the e – pharma companies will offer competitive pricing and access to quality medicines, and ease of consultation even in remote places. 

With Covid -19 pandemic, for the customers, this would mean ease of consultation and quality of medicines delivered at their doorstep, a one-stop-shop bouquet of the value of services.

However, despite the news that Amazon is looking for major investment in Apollo Hospitals owned Apollo pharmacy, no comment on this prospective deal has come in from the management of Amazon and Apollo Hospitals.

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