"EDITION 136"

Published: 8/17/2020

Happy Monday, folks! Vedica here after a week's break with the update today. I hope you all had a good Independence Day weekend - it is always a time for reflection, I feel. Coming to today's news, Practo has raised $32M in a fresh round with a massive valuation haircut and Amazon and Reliance are both eyeing e-pharmacies as the next big thing.

  • https://bit.ly/2Y9SKX8: Practo has raised $32M with at least a 50% haircut in its valuation
  • ➡️ Health-tech firm Practo has raised $32 million in a fresh round with at least a 50% haircut in its valuation. According to regulatory filings in Singapore, Chinese life insurance conglomerate A1A Company has led the round with a $20 million infusion.

    ➡️ Practo was valued $620 million in its series D round in January 2017 (its last raise). According to estimates, the company has been valued in the range of $300-$310 million in the new round, which is a discount of over 50%.

    ➡️ Since the company has raised fresh capital at a heavily discounted valuation, anti-dilution clauses protecting the interests of the early-stage investors have been put in place.equoia Capital is the largest stakeholder in Practo (39.33%), followed by Tencent (11.48%). Matrix Partners and AIA Hong Kong own 7.51% and 7.23%, respectively.

    ➡️ Practo started off as a doctor/hospital discovery platform and has since expanded into telemedicine, e-pharmacy, insurance, and even lending. There's an argument to be made that this breadth hindered the company's ability to create specific moats. It will be interesting to see if the company uses the fresh round to double down on key areas and streamline its operations.

    2. https://bit.ly/2Y6yNAF: Amazon, Reliance set to clash on e-pharmacies

    ➡️ E-pharmacies look set to become the next big arena of focus for big firms with Amazon and Reliance both focusing on this segment, hoping to exploit a fast-growing market fueled by a large base of smartphone users.

    ➡️ Amazon India launched ‘Amazon Pharmacy’ in Bengaluru last week and is looking to conduct pilots in other cities. The company will offer both over-the-counter and prescription-based drugs, basic health devices and traditional Indian herbal medicines. Competitor Reliance Retail is planning to scale up its pharmacy platforms, and through its biotechnology subsidiary, Reliance Life Sciences, is already in the process of setting up pathology labs through partnerships with local entrepreneurs.

    ➡️ e-pharmacies are likely to disrupt the traditional pharmacy distribution model since they can directly deal with drug manufacturers instead of having three-four middlemen in the supply chain, leading to greater cost efficiency.

    ➡️ The health / pharmacy sector has some good tailwinds behind it with the government's focus on healthcare via schemes like Ayushman Bharat, and National Digital Health Mission. According to an EY report, the addressable medicine market for e-pharmacies is likely to reach $18.1 billion by 2023 from $9.3 billion in 2019 (CAGR of ~18%). Retail e-pharmacies are a large and fragmented market with scope for consolidation so it makes sense that Amazon and Reliance are focusing on this segment.

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