Some of the key deals were PharmEasy and Netmeds raising funds from Eight Roads Ventures India, Think Investments, Sistema Asia Fund and others.
"PE investors were already active in other sectors. Education and pharmacy were two sectors that saw some initial resistance from investors. However, things have changed in the past few years and now the e-pharmacy sector especially is witnessing a lot of interest from PE and VC funds," said Dhaval Shah, co-founder of PharmEasy.
PharmEasy, recently valued around $150 million, is looking for acquisitions after its latest round of fund-raising. Shah said apart from medicine sales, the start-up is looking at diagnostics and doctor consultations, among other areas.
With the government issuing draft rules on sale of drugs by e-pharmacies, the regulatory grey zone is clearing. This is likely to boost the sector and trigger investment, felt Shah. The potential market for medicines in India is estimated at Rs 1.2 trillion. E-pharmacy entities, thus, feel the coming quarters would see increased deal activity.
NetMeds, an online pharmacy founded around 2015, is planning a major expansion in smaller cities and towns. At present, it delivers to around 19,000 postal pin codes. This year, the Chennai-based entity got money from the Sistema Asia Fund; last month, it acquired JustDoc, an online video consultation app, in a cash-and-stock transaction.
The pharmaceutical space attracted investment of $489 million (Rs 35.6 billion) in nine deals till September 2018, compared with $273 million (14 deals) during the same period last year and $401 million (19 deals) in all of 2017. While the number of deals went down, the funds raised went up.
One of the biggest PE deals in the pharma space was ChrysCapital taking 10 per cent in Mankind Pharmaceuticals for $350 mn, valuing the Delhi-based company at $3.5 bn. ChrysCapital had sold its 11 per cent stake in the company in 2015 to Capital International for $214 mn, a 10-fold return in seven years. This deal was a return for ChrysCapital to Mankind.