Walmart-backed Flipkart is acquiring online pharmacy startup SastaSundar to enter the healthcare segment in India as the e-commerce battle intensifies in the world’s second-largest internet market.
Flipkart said it has signed definitive agreements to acquire a majority stake in SastaSundar, but did not disclose the size of the deal. Eight-year-old SastaSundar was last valued at $125 million in a financing round in 2019. The Kolkata-headquartered startup, which works with more than 490 pharmacies, raised $48.2 million across several financial rounds prior to the current deal, according to research firm Tracxn.
India’s top e-commerce platform, which is valued at over $37 billion, said its healthcare vertical will be called Flipkart Health+. Flipkart's planned foray into the healthcare space comes at a time when the market is seeing both consolidation and aggressive investments.
Amazon India, Flipkart's chief rival in India, began selling medicines on its marketplace last year. Reliance Retail, the largest retail chain in India, acquired the parent firm of online pharmacy Netmeds last year. Its conglomerate rival, Tata Digital bought online pharmacy 1mg in June
PharmEasy, the market-leading healthcare startup, filed for an $843 million initial public offering earlier this month.
E-pharmacies today account for less than 5% of the pharma market and its "scope for growth is very high with increasing awareness, digital penetration and increasing comfort with online transaction in other categories," analysts at Bernstein said in a report earlier this year. "Even with low levels of penetration, there has been significant levels of consolidation with players exiting and M&A activity," they added.
Ravi Kant Sharma, founder and chief executive of SastaSundar, said the startup's majority stake acquisition to Flipkart will accelerate the younger firm's mission to "provide affordable healthcare to all Indians in a convenient manner."
“The consumer internet ecosystem in India is growing rapidly as consumers recognize the opportunities and convenience that digital adoption is enabling in their lives. With growing awareness and focus on health heightened by the pandemic, there is a large opportunity and demand for affordable healthcare and ancillary offerings,” said Ravi Iyer, senior vice president and head of Corporate Development at Flipkart, in a statement.
“We are excited to enter this space through this investment in SastaSundar.com, a company that has established itself as a trusted partner for lakhs of consumers through genuine products, a technology-powered platform and a wide network. The synergies between the Flipkart Group and SatsaSundar.com, combined with our commitment to prioritize our customer’s needs, will help us grow and transform online healthcare in India.”