StarMedia To Form Latin American Online Pharmacy

Fast-growing Latin American Internet portal and shopping site StarMedia Network (Nasdaq: STRM) has reached a deal to create a Spanish and Portuguese language online pharmacy with Rx.com.

Under the terms of the agreement, the Austin, Texas-based Rx.com will launch an online pharmacy that sells non-prescription drugs, vitamins, minerals and healthcare products. The company said it is unable to fill prescription drug orders written by doctors outside of the United States.

Rx.com said it will also provide healthcare content and 24-hour access to licensed pharmacists on its new site.

StarMedia Taking Off

StarMedia Network operates its Spanish and Portuguese language Web sites throughout the U.S., Mexico, Central America and Latin America. For the first nine months of operations in 1999, it generated revenues of $20.1 million (US$) with a net loss of $90.1 million.

The company grew 60 percent from the third quarter to its fourth quarter and recently netted $192 million in a secondary offering at $34 per share. As of December 31, 1999, it reported $274 million in cash and other liquid assets.

Jostling for Position

The agreement provides StarMedia with more e-commerce ammunition as it transitions itself from being a content-only site to a full-scale e-commerce provider.

While most of the company’s revenues presently come from advertising, StarMedia says it now has more than 50 e-commerce companies on its online shopping center and recently entered a deal with Visa International to offer credit cards online.

Such analysts as Jupiter Communications predict that Internet users in the region will spend $8.3 billion online by 2005, up from a paltry $194 million last year.

Much of that spending was in Brazil, the largest country in size and economy in the region of 500 million people. Internet users in Latin America are predicted to grow from 10 million now to 30 million in the next two years, according to Internet research firm eMarketer.

While e-commerce is poised for rapid growth in Latin America, it is still faced with numerous hurdles, such as low credit card usage, poor delivery systems and customs restrictions.

StarMedia is widely viewed as a logical candidate to seize a good part of any action that occurs. The company went public last May and had a market capitalization of over $1 billion at the close of the first day of trading.