SoftBank in talks to invest $70 million in Indian e-pharmacy Medlife

Five-year-old Medlife, which does 20,000 medicine deliveries a day, is seeking a valuation of around $430 million, say sources

SoftBank is looking at investing in Medlife, India’s largest e-pharmacy and healthcare platform by sales. Though the talks are still in early stages, the Japanese investment giant may put in $60 million-$70 million in Medlife, in what could be the first external investment in the five-year-old start-up. According to two persons having the knowledge of the talks, the Bengaluru-based company is seeking a valuation of Rs 3,000 crore or around $430 million, though this is yet to be agreed upon by the two parties. 

The sources added that SoftBank, which has a reputation to invest in market leaders, is keen to pick a bet in e-pharmacy and has held talks with other leading players in the segment as well. Medlife, which claims it made Rs 1,000 crore in sales in FY19, is the biggest player in the category, more than five times the size of 1mg and PharmEasy. The platform has a pan-Indian delivery network, servicing 20,000 orders a day, and other service lines like e-consultations and lab test booking. The company recently acquired Myra, another e-pharmacy, and e-consultation platform EClinic 24/7 to strengthen its offering.

"Yes, we are open to raising funds externally and we have been approached by several large investment houses,” Tushar Kumar, co-founder and chief executive officer, Medlife said in response to a Business Standard query. He, however, did not comment specifically on the talks with SoftBank.

“We have invested $100 million on our own in the business so far. While we welcome a partnership with marquee investors, we have sufficient resources to achieve our target of a 50 per cent market share in e-pharmacy and a 15 per cent share in the organised diagnostics market in the next three years,” he added in an emailed statement.

Kumar, who started Medlife in 2014, is the son of one of the founders of Alkem Laboratories, a $215-billion Indian pharmaceutical major. Since its launch, the company has been supported by the Alkem family, with the most recent top-up of $17 million coming from Prasid Uno Family Trust, a trust set up by Kumar’s father Prabhat Narain Singh.

SoftBank couldn’t be reached for comment.

If the deal goes through, it will potentially make Medlife a distant Number One in the segment. SoftBank, which has invested $10 billion in India, recently backed baby products firm FirstCry and is close to finalising investments in eyewear retailer Lenskart and DailyHunt, a news-app.
 

The development comes as investors are scooping up deals in the online healthcare space. Recently, mFine, a Prime Ventures-backed online consultation platform, raised $17.2 million from SBI Investment and BEENEXT; omni-channel health products retailer HealthKart got on-board Sofina, a top foreign investor, while Sequoia-backed 1mg is stitching together a $50 million-plus round that may see International Finance Corp, a World Bank arm, put in $10 million.
 

According to consultancy Ernst & Young, the e-pharma sector is seen to grow to $2.7 billion by 2023. 
 

Online delivery is a nascent and underpenetrated sector where app-based players like NetMeds, 1mg, Medlife, PharmEasy and Practo have made significant in-roads. Even horizontal marketplaces like Flipkart and Amazon, and large food-segment players Swiggy and bigbasket are exploring a play in this space, but have so far stayed behind due to regulatory uncertainties.
 

In December 2018, a single judge Bench of the Madras High Court had banned the online sale of medicines, an order that it stayed in January this year.  The court has directed the matter to the government, which in this regard has put forth draft rules.

The draft rules, among other things, require e-pharmacies to seek a mandatory licence from the government, store patient data locally and discreetly, keep a record of prescriptions against drugs sold, and refrain from advertising. The final rules are expected to be notified in the coming months.