Pharmeasy success story

The pharmaceutical industry has historically been characterized by disorganization, but with the advent of digitalization, significant changes have occurred. Now, individuals have the convenience of ordering medicines from a wide range of online eCommerce medical stores and having them delivered directly to their doorstep. Among the key players facilitating this seamless online ordering experience is PharmEasy.

PharmEasy has developed a healthcare delivery platform aimed at streamlining and modernizing the healthcare system in India. This platform enables patients to stay connected with various local pharmacy stores and outlets. Leveraging the power of data and technology, PharmEasy contributes to the development of a robust health and well-being ecosystem in the country.

If you’re curious about PharmEasy’s role, it serves as an online pharmacy that handles the hassle-free delivery of medicines and medical equipment. Operating in numerous major cities across India, PharmEasy has made the process of purchasing medicines online convenient and effortless. Every day, the company delivers medicines and medical equipment to thousands of satisfied customers. For more information on PharmEasy’s success story, founder, business model, growth, competitors, revenue model, funding details, and acquisitions, continue reading.

PharmEasy – Company Highlights

Table of Contents

PharmEasy – About And How It Works?

PharmEasy – Industry

PharmEasy – Founders and Team

PharmEasy – Startup Story

PharmEasy – Name, Tagline and Logo

PharmEasy – Business Model

PharmEasy – Revenue Model

PharmEasy – Funding and Investors

PharmEasy – ESOPs

PharmEasy – Acquisitions

PharmEasy – Challenges Faced

PharmEasy – Customer Acquisition

PharmEasy – Competitors

PharmEasy – Growth and Revenue

PharmEasy – Future Plans

PharmEasy – About And How It Works?

Pharmacy serves as an e-commerce platform specializing in the purchase of medicines and various healthcare-related equipment. When users upload their prescriptions on PharmEasy, they are promptly transmitted to a nearby drugstore. Leveraging the power of mobile app and web technology, the company ensures the availability of premium healthcare products and essentials to customers at affordable prices.

Now, you might be skeptical about discounted products, assuming they are of inferior quality. However, it’s important to note that discounts offered by PharmEasy do not compromise the quality of the products. The pharmacy is committed to providing top-notch items that meet the same standards as those found in reputable pharmacies and medical stores.

Once PharmEasy dispatches your medical prescription to the designated drugstore, a diligent delivery agent collects the prescribed medicines while adhering to strict precautions and guidelines. Subsequently, your order is carefully packaged and promptly delivered right to your doorstep.

PharmEasy – Industry

The healthcare and medicine industry, like many other sectors, has experienced significant growth driven by the adoption of new-age technologies and the internet. The number of internet users has exhibited a notable compound annual growth rate (CAGR) of 18.17% between 2015 and 2019, with further projections of an 8.78% CAGR in 2020-25. Moreover, e-commerce transactions witnessed a substantial increase of 71.3% between April and September 2020.

According to a leading consulting firm, the Indian e-pharmacy market is expected to witness exponential growth, surpassing 7 times its size between 2019 and 2023. The market is projected to reach a value of $2.7 billion (Rs 21,081 crore) by 2023, a significant jump from its recorded value of $360 million (Rs 2,810 crore) in 2019, with an impressive CAGR of 65.5%. This growth trajectory is nothing short of fascinating.

PharmEasy – Founders and Team

PharmEasy, one of India’s leading healthcare delivery ventures, was founded by Dharmil Sheth and Dr. Dhaval Shah.

Dharmil Sheth: 

Dharmil Sheth is the Co-founder of PharmEasy and API Holdings. He also holds the position of Founder-President at Ekagrata. Prior to PharmEasy, Sheth founded 91streets. He holds a Btech degree in Electronics Engineering and an MBA in Marketing from IIM Ghaziabad. Dharmil gained valuable experience in Business Development, working with companies like Techno Gravity Solutions and MakeMyTrip.com.

Dr. Dhaval Shah: 

Dr. Dhaval Shah completed his MBBS from Rajiv Gandhi Government Medical College and later pursued an MBA from XLRI Jamshedpur. He served as the General Secretary at both of his colleges. Dr. Shah began his professional career as a Consultant at McKinsey & Company before venturing into the establishment of PharmEasy and API Holdings.

The PharmEasy team is dedicated to maximizing digitization efforts as they strive to become India’s premier healthcare delivery enterprise. The company continues to expand its workforce, adding new employees regularly.

PharmEasy has listed its employee count on LinkedIn as between 1001-5000.

PharmEasy – Startup Story

Dharmil Sheth, the founder of PharmEasy, teamed up with his friend and doctor, Dr. Dhaval Shah, to establish an online pharmacy. Recognizing the immense potential of technology in the healthcare sector, they conceived the idea that eventually led to the creation of PharmEasy in 2014. At present, the company caters to almost 98% of the Indian pin codes, ensuring widespread coverage of its services.

PharmEasy set out with a mission to achieve doorstep delivery of all healthcare-related products, and it is steadily progressing towards that goal. Digitization has become an essential part of India’s healthcare industry, transforming processes such as scheduling doctor’s appointments and facilitating the delivery of medical reports and medicines. E-pharmacies like PharmEasy have played a significant role in driving this digitization initiative. As a result, the “health commerce industry” in India is experiencing unprecedented growth, thanks to the contributions of these e-pharmacies.

PharmEasy – Name, Tagline and Logo

“Take it easy PharmEasy” says the tagline of the company.

PharmEasy – Business Model

PharmEasy operates as an e-pharmacy, offering the convenience of online ordering and delivery of medicines and medical accessories to various towns and cities in India. Often referred to as the “Grofers for medicine,” PharmEasy utilizes pin codes to identify the nearest pharmacies to customers. Users can access the PharmEasy website or mobile app to place their orders. By ordering through the app, customers can avail discounts of up to 20%, enhancing brand recognition and attracting new customers to PharmEasy.

PharmEasy functions as a 3-way chain, connecting buyers, suppliers, and the distribution network in the online realm.

Buyers: PharmEasy provides a user-friendly platform for buyers to search for their required medicines and healthcare accessories, enabling hassle-free online purchasing.

Suppliers: PharmEasy collaborates with a wide range of local suppliers and medical shops, allowing the company to manage and showcase their stocks online. Additionally, the company generates revenue by featuring products from pharmaceutical companies on their website and app.

Distribution Channel: PharmEasy boasts an extensive distribution network spanning across India, enabling the delivery of products to a wide range of pin codes.

It’s important to note that PharmEasy adheres to Indian government regulations and does not deliver Schedule H drugs.

One of the common reasons people are hesitant about using e-pharmacies is uncertainty about the source of medicines. However, PharmEasy aims to dispel this notion by ensuring transparency and reliability in its supply chain.

PharmEasy – Revenue Model

PharmEasy generates revenue through various channels, leveraging its platform and services.

1. Sponsored Results: PharmEasy earns a significant portion of its revenue by displaying sponsored results from pharmaceutical entities. These advertisements are prominently featured on the home page of the platform, providing a targeted marketing opportunity for pharmaceutical companies.
2. Advertising: Advertising is a major source of revenue for PharmEasy. By utilizing new-age strategies, the platform offers opportunities for businesses to advertise their products, services, or brands. This generates additional income for PharmEasy while providing visibility to the advertisers.
3. Discounts: PharmEasy attracts customers by offering attractive discounts on healthcare products and medicines. While these discounts may reduce the immediate revenue, they contribute to customer acquisition, retention, and brand loyalty.
4. Commission: PharmEasy earns a commission from its customers for the healthcare products and medicines sold through its platform. This commission is a percentage of the total transaction value and contributes to the revenue stream.
5. Delivery Charges: PharmEasy levies delivery charges on the products it delivers, providing an additional source of revenue. These charges help cover the logistics and operational costs associated with the efficient and timely delivery of orders.

Overall, PharmEasy utilizes a combination of sponsored results, advertising, discounts, commission from sales, and delivery charges to generate revenue and sustain its operations as a leading e-pharmacy platform.

PharmEasy – Funding and Investors

PharmEasy, a prominent e-pharmacy platform, has successfully raised a total of $1.60 billion in funding so far. In its most recent funding round, the company secured a private equity fund from VestinWolf Capital Management. Prior to that, PharmEasy raised $354 million in a Pre-IPO round from a group of investors. As of July 20, 2022, the company is reportedly aiming to raise approximately $200 million at a valuation 15-25% lower than its valuation in the previous year, which stood at $5.1 billion. The decision to seek funds at a lower valuation is attributed to market volatility, low investor sentiments, and the funding climate during that period.

During the primary funding round, PharmEasy raised $204 million, with investors including Amansa Capital, Steadview Capital, OrbiMed, Abu Dhabi’s sovereign wealth fund ADQ, among others. In a subsequent funding round, the company raised around $150 million through partial exits by existing angels and early-stage investors such as Fundamentum, Eight Roads Ventures, and Bessemer Venture Partners. PharmEasy also disclosed that over 20 senior employees, five founders, and some new investors acquired secondary shares at a valuation of $5.6 billion. As of February 2022, the company’s current valuation is $5.4 billion. PharmEasy is in the process of filing its Draft Red Herring Prospectus (DRHP) and will determine its IPO pricing after receiving approval from SEBI (Securities and Exchange Board of India).

In a prior funding round, PharmEasy raised a significant amount of $500 million through its Series F funding round led by Arokiaswamy Velumani in June 2021. This round valued the company at $1.8 billion.

PharmEasy’s funding journey showcases its ability to attract substantial investments from a range of investors, further solidifying its position in the e-pharmacy market.

Here are all the funding and investor details of PharmEasy to date.

PharmEasy has 12 lead investors among 43 total investors that it has. VestinWolf Capital, Trifecta Capital, Steadview Capital, Amansa Capital, IIFL Finance and more are among the lead investors of PharmEasy.

PharmEasy – ESOPs

PharmEasy’s Valuation and Employee Stock Options (ESOPs)

In February 2022, PharmEasy achieved a valuation of $5.4 billion, reflecting its exceptional growth in the healthcare sector. To recognize the contributions of its co-founders and employees, the company has introduced new employee stock options (ESOPs) as a reward.

Through a special resolution, PharmEasy has decided to allocate approximately 79,987 ESOPs to each of its five co-founders: Siddharth Shah, Dharmil Sheth, Hardik Dedhia, Karsh Parekh, and Dhaval Shah. The cumulative value of these shares in the Founders’ ESOP pool is estimated to be around Rs 236 crores.

In addition to the Founders’ ESOP pool, PharmEasy has expanded its ESOP pool to include new options worth Rs 356 crore for eligible employees. This expansion involves the issuance of 603,103 equity shares.

To ensure compliance with SEBI regulations, PharmEasy has also made amendments to its existing ESOP Scheme, aligning it with the regulatory framework.

These initiatives by PharmEasy reflect the company’s commitment to rewarding its founders and employees for their contributions and further aligning their interests with the growth and success of the organization.

PharmEasy – Acquisitions

PharmEasy’s Acquisitions

PharmEasy, the leading e-pharmacy in India, has made strategic acquisitions to expand its presence and strengthen its position in the healthcare industry. Here are the details of the companies acquired by PharmEasy:

1. Aknamed: PharmEasy acquired Aknamed, a Bangalore-based healthcare supply chain management company, on September 14, 2021. PharmEasy purchased the majority stakes of Aknamed for an initial investment of Rs 308 crores ($41.90 million). The complete acquisition of Aknamed is expected to be finalized in the coming months, with the deal size estimated to be around Rs 1000 crores ($136.04 million).
2. Thyrocare Technologies: On June 26, 2021, PharmEasy acquired 66.1% stakes in Thyrocare Technologies, a Mumbai-based diagnostics and preventive care laboratory, in a deal worth Rs 4,564 crores ($620 million). This acquisition allowed PharmEasy to enhance its presence in the diagnostics sector.
3. Medlife: Medlife, an online medicine supplier based in Bangalore, was merged with PharmEasy on May 25, 2021. The Competition Commission of India approved the merger, marking the first major consolidation in the sector after the entry of Amazon and Reliance. PharmEasy’s parent entity acquired 100% equity of Medlife, while the promoters of Medlife received a 19.95% stake in the entity. The majority stakes in Medlife were valued at $250 million.

Here is a summary of the acquisitions:

These acquisitions have allowed PharmEasy to expand its reach, diversify its services, and consolidate its position as a key player in the healthcare industry in India.

PharmEasy – Challenges Faced

PharmEasy has faced several challenges throughout its journey in the online pharmacy segment. Some of the key challenges the company encountered include:

1. Prescription Requirement: Initially, PharmEasy faced difficulties in delivering products without a valid prescription. It was mandatory for customers to provide a prescription for the products they ordered, which led to some users being hesitant to upload their prescriptions due to concerns about privacy and potential consequences.
2. Location Tracking: In the early days, location tracking for PharmEasy’s delivery agents was challenging. Ensuring accurate and timely delivery to customers was a hurdle that the company had to overcome.

Despite these challenges, PharmEasy has successfully navigated its way and experienced significant growth since its establishment in 2014.

In terms of workforce management, PharmEasy underwent layoffs on June 16, 2022. Around 40 employees from its subsidiary, Docon Technologies, primarily from the sales department, were affected by the layoffs. The company provided a two-month salary as part of the severance package and offered assistance to help the affected employees find new job opportunities. Additionally, Docon Technologies was rebranded as PharmEasy One, and most of the employees were transitioned to other entities within API Holdings, the parent company of PharmEasy.

PharmEasy – Customer Acquisition

When it comes to customer acquisition, PharmEasy has been successful in acquiring new users by building trust and delivering value to its customers. The company’s focus on customer satisfaction and retention has contributed to its ability to attract new users and maintain a solid user base.

PharmEasy – Competitors

PharmEasy faces competition from several players in the online pharmacy and healthcare industry. Some of its top competitors include:

1. Tata 1mg: Tata 1mg is a leading online healthcare platform that offers a wide range of products and services, including medicines, diagnostics, doctor consultations, and wellness products.
2. Ranger Health: Ranger Health is an online healthcare platform that provides services like online medicine ordering, doctor consultations, and healthcare management tools.
3. Medibuddy: Medibuddy is a digital healthcare platform that offers services like online doctor consultations, medicine delivery, health check-ups, and insurance solutions.
4. Myra Medicines: Myra Medicines is an online pharmacy platform that offers fast medicine delivery within a few hours. They focus on providing a seamless and convenient experience to customers.
5. Hello Heart: Hello Heart is a digital health company that specializes in cardiovascular care. They provide personalized tools and resources to help users manage their heart health effectively.
6. BrownPacket: BrownPacket is an e-pharmacy platform that offers medicine delivery services. They aim to make healthcare accessible and convenient by ensuring timely and reliable delivery of medicines.

In addition to these competitors, established hospital chains like Apollo Pharmacy are also expanding their online presence and offering online medicine delivery services in conjunction with their physical stores.

While these competitors are striving to reinforce their online medicine delivery systems, PharmEasy has emerged as a leader in the industry, enjoying a strong market position and a larger customer base compared to its rivals.

PharmEasy – Growth and Revenue

PharmEasy has experienced significant growth in recent years, demonstrating impressive financial performance.

In terms of revenue, the company nearly doubled its revenue from Rs 340 crore in the previous financial year to approximately Rs 737 crore in FY20. In FY21, PharmEasy achieved exceptional growth, with revenues jumping by 220% to reach Rs 2,360 crore.

However, along with the increase in revenue, the company also witnessed a significant rise in expenses, which amounted to Rs 2,980.9 crore in FY21 compared to Rs 1,084.4 crore in FY20, marking a 147.8% increase. As a result, PharmEasy reported a loss of Rs 641.3 crore in FY21, up 91% from the loss of Rs 335.2 crore in FY20.

PharmEasy has filed its Draft Red Herring Prospectus (DRHP) with SEBI, and it plans to raise up to Rs 6,250 crore through a fresh issue of shares in its upcoming IPO. The company’s existing investors will not be selling any shares in the IPO. Additionally, PharmEasy has announced its intention to raise up to INR 1,250 crore through a pre-IPO fundraise via private placement after consulting with the Book Running Lead Managers (BRLMs).

PharmEasy currently partners with over 60,000 brick-and-mortar pharmacies throughout India and has served more than 20 million patients since its inception.

The success of PharmEasy can be attributed to the excellent leadership and decision-making of its founders, Dhaval Shah and Dharmil Sheth, who have navigated various challenges and obstacles to establish PharmEasy as a prominent brand in the online pharmacy sector.

PharmEasy – Future Plans

As of February 2022, PharmEasy is reassessing the timing of its IPO due to market volatility. The company had initially planned to raise approximately Rs 6,250 crore through a fresh issue of shares towards the end of 2021. However, the decision to launch the IPO is currently under review, and a new timeline has not been announced.

Market conditions and investor sentiment play a significant role in determining the optimal timing for an IPO, and PharmEasy is monitoring these factors before proceeding with its public offering.

FAQs

Who is PharmEasy’s owner?
API Holdings Private Limited is the parent organization of PharmEasy. Dhaval Shah and Dharmil Sheth are the founders of PharmEasy.

What is PharmEasy’s revenue and profit?
PharmEasy’s revenue increased by around 220% to reach Rs 2,360 crore in FY21. However, PharmEasy has not been profitable yet, and the company’s losses increased by 91% to Rs 641.3 crore during the same fiscal year.

How does PharmEasy work?
Customers can upload their prescription on the PharmEasy platform, which is then sent to a nearby drugstore. The pharmacy prepares the package, and it is delivered to the customer’s doorstep within the specified time.

What is PharmEasy’s net worth?
PharmEasy was last valued at $5.4 billion after raising $350 million in its Pre-IPO round.

Is the PharmEasy office in Bangalore its headquarters?
No, the headquarters of PharmEasy is located in Mumbai, Maharashtra. However, the company also has an office in Bangalore.

How much funding has PharmEasy raised in funding rounds?
PharmEasy has raised a total of $1.60 billion in funding as of February 2022.

What is the shareholding pattern of PharmEasy?
The shareholding pattern of PharmEasy includes various stakeholders such as Prosus, Temasek, Surbhi Singh and Universal, TPG Growth, Evermed Holdings, A. Velumani, caisse de dépôt et placement du québec, Lightstone, TIMF Holdings, and Bessemer Venture Partners, among others.

What are the acquisitions made by PharmEasy?
PharmEasy has made three major acquisitions: Aknamed, Thyrocare, and Medlife.