May 2021 saw a shift in the balance of power in India’s hospital supply chain segment. Bengaluru-based Akna Medical acquired specialty drugs distributor Vardhman Health on 19 May, becoming India’s largest hospital supplier in the process.
It’s a big leap for the young startup, which was only founded in November 2018. In the year ended March 2020, Aknamed, as the brand is called, earned Rs 24 crore ($3.3 million) in revenue. That same year, Vardhman—which was founded in 1997—clocked revenues of Rs 373 crore ($50.8 million). The $35 million acquisition is Aknamed’s third and most expensive acquisition of a drug distributor in its short lifetime. Last year, it bought Delhi-based Impex Healthcare and Mumbai-based Shreeji Distributors Pharma, which together accounted for revenues of over Rs 100 crore ($13.6 million) for the financial year ended March 2020. Aknamed declined to reveal how much it spent on both companies.
The juice for Aknamed’s acquisitions came from a Series B round of about $50 million that it is still in the process of raising, according to an executive who is aware of Aknamed’s plans. They requested anonymity as the company is yet to announce this fundraise. Previously, Aknamed raised Rs 54 crore ($7.4 million) in a Series A round from Bengaluru-based private equity (PE) fund LGT Lightstone Aspada, now known as Lightrock, in April 2020.
These three acquisitions have fleshed out Aknamed’s offerings. Originally, the startup built a basket of products ranging from drugs used by pediatric, obstetrics, and gynaecology departments, and medical products ranging from diapers to stents. With Impex, it gained access to specialty drugs such as immunotherapy and critical care—including remdesivir that was approved for the treatment of Covid-19—in Delhi. Shreeji gave it the generics medicines market in Mumbai. Vardhman, the latest piece in the Aknamed puzzle, added a countrywide oncology portfolio to Aknamed’s basket.
With the three acquisitions, Aknamed now has a client list of over 750 hospitals across the country. It now stands primed to spread its roots further afield in India’s hospital supply chain segment. Accounting for a quarter of the overall Indian healthcare industry—a market forecast to reach Rs 8,60,000 crore (US$ 132.84 billion) by March 2022—the hospital supply segment is worth an estimated Rs 2,15,000 crore ($29.3 billion).
With its product basket now overflowing, Aknamed plans to halt its acquisition spree, said Saurabh Pandey, the company’s co-founder and CEO.
Pandey now plans to integrate the acquired businesses to hit a target revenue of Rs 5,000 crore ($681 million) over the next four years as Aknamed attempts to become a one-stop-shop for everything that a hospital needs to operate.