India’s top pharma majors in talks to buy Pharmarack, Health News, ET HealthWorld

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India's top pharma majors in talks to buy PharmarackBengaluru: A consortium of India’s top pharmaceutical majors, including Sun Pharma, Cadila Healthcare, Lupin and Torrent Pharma, is in advanced negotiations to acquire business-to-business healthcare platform Pharmarack, according to multiple people aware of the move aimed at building a digital-first pharma distribution business.

Regulatory filings by the four companies last week reveal that each has invested Rs 40 crore for 20% in newly formed venture ABCD Technologies, with the stated objective of facilitating efficient goods distribution and digitising healthcare.

This new entity, due to be renamed IndoHealth Services, will acquire Pune-based Pharmarack, sources close to the development told ET. The digital platform, having onboarded 3,000-4,000 distributors and 100,000 retailers, will provide the technological backbone to companies looking to build their own online B2B marketplace and, eventually, an online pharmacy, according to people in the know.

“They (Lupin, Sun, Torrent and Cadila) are acquiring (a) B2B marketplace for pharmaceuticals, Pharmarack. The major reason they are doing this is because it’s getting competitive with Tata, Reliance and everyone else coming into the sector,” said one person cited above.

A second person directly involved in the deal confirmed that ABCD Technologies was in the process of buying out 100% equity in Pharmarack and that the deal would be closed soon. ET could not ascertain the exact size of the deal.

Sun and Lupin declined to comment for this story, while Torrent did not reply to ET’s queries and Cadila could not be reached for comment. Pharmarack cofounder and chief executive Amit Backliwal did not respond to ET’s calls and messages for a comment.

The consortium has appointed KPMG to draw up a strategy for building an online pharmacy to compete in the online pharmacy segment. There has been consolidation, with Reliance Industries acquiring majority stake in Chennai-based Netmeds, Tata group in the final stages of acquiring majority stake in 1mg, Amazon foraying into the segment with its largest seller Cloudtail, and Apollo Pharmacy launching its own online platform.

These players are expected to grow their private label portfolios in the coming years, driving up competition for traditional pharma companies.

“Reliance, through Netmeds, has already started working on its own private label brands. Apollo Pharmacy already has a strong private brand portfolio and other large retailers are also expected to do the same, as it’s a highly lucrative business,” said multiple sources.

More Investors Likely

While Sun, Cadila, Lupin and Torrent are the only four companies to have disclosed their investment in ABCD Technologies so far, more pharmaceutical companies are expected to buy in. People in the know of the deal said Alkem Laboratories was another possible investor, but ET could not confirm this independently.

Lupin, in its disclosure to the bourses on March 25, said, “There are other leading pharmaceutical companies who would be joining the LLP. The proposed structure would ensure transparent and effective competition to the benefit of patients in India.”

An executive of a competing firm who was aware of the developments said the intent of the consortium is to consolidate India’s pharma distribution, which is necessary. He added that the players would have to maintain neutrality of the platform in order to get other pharmaceutical majors to work with Pharmarack.





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