PharmEasy to merge with Medlife, could be valued at $1.2 billion

Online pharmacy PharmEasy has formally filed with the Competition Commission of India (CCI) seeking approval for the merger with its smaller rival Medlife, documents show.

Medlife and its promoters will get a 19.59 percent stake in PharmEasy's parent company API Holdings for about $230 million, while PharmEasy holds the remaining 80 percent stake. This would value PharmEasy's parent at $1.2 billion, making it the largest player in the space so far.

Moneycontrol first reported on July 21 that PharmEasy has been in talks to acquire Medlife for about $200 million, after Medlife was unable to raise external funds from investors.

Founded by Tushar Kumar and Prashant Singh in 2014, Medlife provides medicines, health products, doctor consultations and tests on its website and app. It has not raised any external venture funding so far--an anomaly in the sector--and has been supported by co-founder Kumar’s trust.

"The proposed combination relates to the acquisition of 100 percent equity shares of Medlife by API Holdings, and as consideration, the acquisition of up to 19.59% of the equity share capital of API Holdings (on a fully diluted basis), by the Medlife Promoter Shareholders and other shareholders of Medlife," Medlife said in a filing with the antitrust regulator. The deal is still pending approval.

The Indian online pharmacy space is becoming a hotly contested one, more so with the recent entry of American giant Amazon and Reliance Industries (RIL). Amazon launched an e-pharmacy service in Bengaluru last week, while RIL is in advanced talks to acquire Netmeds for about $150 million.

The COVID-19 pandemic has boosted the e-pharmacy space. Although mergers- expected for a while- are finally happening, these companies are also seeing orders surge as much as 50 percent in the last few months, and are seeing many more first time customers.

PharmEasy last raised $220 million in a funding round late 2019, led by Singapore’s sovereign fund Temasek and Canadian pension fund CDPQ, among others. It was valued at about $700 million.