Internet Retail M&A Transactions and Valuations, Subsector Pharmacy and Para-Pharmacy

The expansion of e-commerce and the demand for accessible, digital-first solutions have contributed to increased M&A activity in the internet retail sector, particularly in the pharmacy and para-pharmacy subsector. This report examines transaction trends, valuation metrics, and regional dynamics from Q1 2020 to Q3 2024, with a focus on the strategic rationale behind M&A activity. Information is presented on capital flows, deal structures, and key valuation multiples such as EV/revenue and EV/EBITDA to provide a comprehensive understanding of market trends and valuation patterns in the sector.

Parfümerie Douglas’s acquisition of Disapo Apotheke, Talea Group’s purchase of Amicafarmacia, and Farmacosmo’s investment in Farmacia De Leo demonstrate strategic goals such as market expansion, omnichannel integration, and operational efficiency. These examples indicate how M&A activities influence the competitive landscape, offering insights for financial advisors, investors, and industry leaders navigating this evolving market.

Valuations

Valuation multiples from M&A transactions in the internet retail sector as well as the pharmacy and para-pharmacy subsector are presented, showing the relationship between enterprise value and key metrics such as EV/revenue and EV/EBITDA. The data includes market valuations, M&A trends, clustering patterns, and high-value outliers.

• The valuation multiples are derived from a sample set of private and public M&A transactions within the internet retail sector as well as the pharmacy and para-pharmacy subsector. The data was collected on November 19, 2024.
• The graph shows significant variability in both EV/revenue and EV/EBITDA multiples for companies with enterprise values below $100 million. This variability indicates that smaller enterprises are assessed based on a wider range of growth and risk factors, such as market position, operational efficiency, and future scalability. Investors often assign higher valuations to smaller firms with strong growth potential, while others receive lower valuations due to increased financial volatility.
• EV/EBITDA multiples vary more broadly across all enterprise values compared to EV/revenue multiples. This occurs because EBITDA incorporates profitability, which differs significantly even among firms of similar sizes. Companies with higher profit margins achieve higher EV/EBITDA multiples, while those with lower profitability or elevated costs face reduced valuations. This underscores the importance of efficient operations in enhancing enterprise value.

Capital Markets Activities

The covered period reflects significant shifts in transaction trends, valuation metrics, and regional dynamics within the sector. Factors such as evolving consumer behavior, regulatory adjustments, and economic uncertainty impacted transactional activity and valuations. The geographic distribution of transactions and deal structures highlights their role in shaping M&A dynamics and the broader competitive landscape.

• Between Q1 2020 and Q3 2024, more than $120 billion was invested in the internet retail sector and pharmacy and para-pharmacy subsector for the middle market across approximately 1,407 deals, with an average deal size of around $91 million.
• Capital investment peaked in Q4 2021 as companies accelerated post-pandemic digital transformation efforts and responded to the surge in e-commerce demand. Businesses pursued strategic acquisitions to expand online capabilities and capture market share in the rapidly growing sector.
• From mid-2022 deal counts decreased, but capital investment stabilized as companies concentrated on fewer, larger transactions. This trend reflects a preference for high-value acquisitions aimed at achieving economies of scale, strengthening digital platforms, or expanding omnichannel strategies.
• M&A activity steadily declined after mid-2023, with sharper drops by Q3 2024. Market saturation, rising interest rates, and economic uncertainty drove the slowdown. Tightened credit conditions and more cautious investor sentiment further reinforced a selective investment approach in the sector.

The graphs below present the geographic distribution of transactions, providing additional detail on regional trends and investment dynamics.

• US-based acquirers account for 39% of the capital invested and 32% of the deal count in the internet retail sector, particularly in the pharmacy and para-pharmacy subsectors. This dominance reflects the strategic importance of the US market, where companies are leveraging significant capital to secure high-value transactions, while a substantial portion of deals continues to occur in international markets.
• Acquirers in the UK invested 9% of the capital and accounted for 10% of the deals, reflecting a fragmented market with smaller deal sizes. Companies appear to focus on scaling local players or acquiring niche businesses to strengthen their presence in the growing e-commerce landscape for health and wellness products.
• Italy and Germany each contributed 4% of the total capital invested, indicating smaller, localized deals within their markets. These deals are likely aimed at enhancing digital operations and expanding regional pharmacy and para-pharmacy networks, aligning with their established healthcare infrastructure and growing online demand.
• Investors in other regions contributed 40% of the capital and completed 45% of the deals, revealing the fragmented nature of M&A activity outside major markets. Companies increasingly target emerging regions or smaller European countries, using localized acquisitions to implement regional growth strategies in response to rising e-commerce penetration.

The deal-type dynamics below set the stage for understanding how capital flows and strategic priorities shape the internet retail and pharmacy and para-pharmacy subsectors growth and landscape.

• Mergers and acquisitions constituted over 70% of both deal count and capital invested, as companies in the internet retail sector and pharmacy and para-pharmacy subsector pursued large-scale consolidations to strengthen market presence, improve operational efficiencies, and secure competitive advantages.
• Buyout transactions captured a significant portion of capital invested, despite accounting for a smaller share of total deals. Investors focused on high-value targets, typically involving well-established or rapidly growing companies, to enhance strategic market positioning and create long-term value.
• Add-on acquisitions accounted for the smallest share of both deal count and capital investment, as companies prioritized larger, stand-alone transactions. Firms emphasized transformative acquisitions to drive growth and digital transformation rather than smaller, incremental expansions.
• The alignment of capital investment with the high volume of M&A deals demonstrates a balanced approach, where companies allocate resources strategically across multiple transactions. This indicates a focus on maximizing value through diversified acquisitions that enhance both scale and capabilities.
• The significant capital flows into M&As and buyouts underscore the sector’s drive to consolidate and streamline operations. Companies are leveraging these transactions to stay competitive in the fast-evolving e-commerce landscape, particularly in the highly specialized pharmacy and para-pharmacy subsector.

M&A Transactions Case Studies

Three key transactions highlight how M&A activity in the sector drives strategic growth and innovation. Companies leverage acquisitions to enhance market presence, integrate e-commerce capabilities, and create competitive advantages in an evolving industry, catering to the growing demand for online health and wellness solutions.

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Transaction Structure

In April 2022, Parfümerie Douglas, supported by financial sponsors including Partners Group, CVC Capital Partners, and the Canada Pension Plan Investment Board, acquired Disapo.de Apotheke for approximately $63 million. The transaction was structured as a leveraged buyout, which combined equity from the investors and debt financing to fund the purchase.

Market and Customer Segments Combination

The acquisition allowed Parfümerie Douglas to leverage Disapo.de’s strong online presence and customer base alongside its own extensive network of physical stores and digital platforms. Disapo.de’s established operations in key European markets, such as Germany, Austria, and France, enabled Douglas to expand its reach and enhance its service offerings for both existing and new customer segments, including those seeking convenient online access to health and wellness products.

Acquisition Strategic Rationale

The deal aligned with Douglas’s strategic goals of omnichannel expansion and market leadership. By integrating Disapo.de’s online pharmacy capabilities, Douglas strengthened its position in the fast-growing e-commerce pharmacy sector. The acquisition also created operational synergies, including enhanced supply chain efficiencies and a broader product portfolio, while improving its ability to meet evolving customer demands for integrated online and offline shopping experiences.

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Farmacia De Leo, based in Messina, Italy, offers a wide range of health and wellness products, including OTC medications, supplements, and cosmetics. In 2010, it launched Pharmasi.it, an online platform with over 30,000 products, expanding its reach to a broader customer base.

Transaction Structure

Farmacosmo acquired a 67% stake in Farmacia De Leo. The purchase price was partially paid in cash of more than $1 million, and partially in Farmacosmo shares, valued at about $3 each. An additional payment of more than $1 million was made following the determination of the net financial position at the time of closing.

Market and Customer Segments Combination

Farmacia De Leo offers a diverse range of health and wellness products and significantly broadened its customer base by tapping into the online market. By acquiring Farmacia De Leo, Farmacosmo capitalized on a dual-channel strategy, combining a strong local pharmacy presence with a well-established e-commerce platform. This integration strengthened Farmacosmo’s market position, allowed it to cater to both traditional and digital customer segments, optimized distribution channels, and expanded its footprint in the competitive health and wellness sector.

Acquisition Strategic Rationale

The acquisition aimed to strengthen Farmacosmo’s omnichannel strategy by integrating physical and online pharmacy operations, creating seamless health hubs. It also enhanced geographical reach with a logistics hub in Sicily, which improved delivery efficiency in insular regions. Additionally, the deal generated operational synergies and expanded value-added services, optimized costs, and enhanced customer experience.

The internet retail sector, particularly the pharmacy and para-pharmacy subsector, continues to evolve, driven by strategic M&A activity aimed at enhancing market positioning and meeting the growing demand for digital healthcare solutions. Transactions highlight the sector’s focus on omnichannel growth, operational synergies, and technological advancements, positioning companies to thrive in an increasingly competitive market. As businesses consolidate and innovate, the sector offers significant opportunities for growth and value creation in both established and emerging markets.

Source: MarketScreener, Farmacosmo, Douglas, Pitchbook Data.