E-pharmacy firm Medlife acquires MedLabz

Bengaluru-based online e-pharmacy company Medlife, which is clocking an annualised revenue run rate of Rs 100 crore per month, on Thursday announced the acquisition of Mumbai-based digital healthcare platform and 'Diagnostics at home' services startup MedLabz for an undisclosed cash and stock deal.

This is their second acquisition in less than three months. Only in November last year, the company had acquired EClinic 24/7.

The company wants to double its revenue run rate to Rs 200 crore by March this year and touch Rs 500 crore by March 2020.

Medlife, which recently opened its central laboratory in the city, aims to become the second largest player in the lab space. "We want to scale up our lab business and our target is to touch Rs 500 crore," Tushar Kumar, Founder, and CEO of Medlife said.

The central lab is spread over 5,000 square feet and is a fully automated path lab. It will provide a wide range of services ranging from Digital X-Ray, 3D Ultra Sound, 2D Echo, cardiac tests like ECG and TMT with a capability of processing nearly 10,000 tests in a single shift.

MedLabz was founded in 2015 and it has served over two lakh patients since then and operates in 120 cities across the country. "Ours is a team of 35 people and we had raised Rs 2.35 crore previously in both angel and seed funding," said Siddharth Bidwan, founder and CEO of MedLabz, who will be working for Medlife from Bengaluru.

Tushar said, "The diagnostic capabilities offered by MedLabz will help us strengthen our position in the diagnostics segment. In diagnostics alone, we have so far served 90,000 unique customers till date with over 1.50 lakh deliveries. We will be equipped to now serve more people with our enhanced services through our Lab Technology platform."

Medlife delivers medicines to over 22,000 pin codes across the country and with 30 warehouses, it has the widest reach. In 2017, it had raised $60 million.

Medlife, which has 30% market share in the e-pharmacy business at present, wants to take it to 50% in two years. "The online pharmacy market is rapidly growing and it will touch $4 billion in the next four to five years," said Tushar.

According to Frost & Sullivan's latest report 'In the spotlight: e-pharmacy in India, An exponential growth opportunity', the e-pharmacy market in India is estimated to be around $512 million (Rs 3,500 crore) in 2018 and is estimated to grow at a CAGR of 63% to reach $3.6 billion (Rs 25,000 crore) by 2022.

It is expected that the e-pharmacy model could account for 15%-20% of the total pharma sales in India over the next 10 years, largely by enhancing adherence and access to medicines for a majority of the underserved population, according to the report.

Currently, many e-pharmacy players such as Medlife, Netmeds, 1MG, Pharmeasy, Myra, CareOnGo and Pharmasafe operate in this segment.

Targets offline pharmacies

Medlife has been diversifying and also offering value-added services like online consultation, scheduling appointments with doctors and clinics, app-based healthcare related services, health blogs and tieups with diagnostics and laboratories. "We will be starting our offline presence and we are in talks with pharmacies. To begin with, we are planning 250 stores and within the next two years, we will be having 1,000 stores, and for these acquisitions, we will be investing Rs 250 crore," Tushar told DH. The company's present turnover is $100 million.

In August last year, the Union Health Ministry released draft rules on the sale of drugs by e-pharmacies and is awaiting feedback over the next few weeks before finalising the policy. Tushar said, "we are waiting for the final regulations".

E-pharmacies are currently governed by state drug regulators, and the e-pharmacy draft guidelines have proposed that the DCGI (Drug Controller General of India) should be the sole agency granting approvals to e-pharmacies and that the DCGI will be regulated under the Drugs and Cosmetics Rules 1945 as well as the Information Technology Act 2000 under which e-commerce companies are regulated. Also, companies operating e-pharmacies are required to take one license in any state. Any state license will enable the pharmacies to sell drugs all over the country.