PharmEasy is the brainchild of Dharmil Sheth and Dhaval Shah, which has taken the Indian online pharmaceutical space by storm in less than six years of its launch. As the biggest pharmacy aggregator in India, the start-up caters to more than 25 lakh families annually. It has also added more than 20,000 new pin codes over the past few years. Its ultimate aim is “to be a singular platform to cater to all of our users’ healthcare needs- be it medicine delivery, healthcare products, diagnostic tests, doctor consultations.” PharmEasy reaches out to its customers via its mobile app and is present pan-India.
The Pharmaceutical Industrial Sector in India
In 2019, approximately 8,50,000 pharmacy retail stores existed in India which suffice for 99% of Indian drugs and medicine sales while Online Pharmacy contributes to only 1% of total medicine sales in India. The online pharmacy is gradually increasing in size in the Indian market due to increasing digital awareness, smartphone usage, and convenient payment solutions. Online pharmacy is the latest entrant in the Indian e-commerce market gaining interest from both government agencies and investors.
The total worth of the online pharmacy market is approx a billion dollars with the assistance of 30 new start-ups in different segments and regions of India. In the year 2015, eleven initial start-ups of online pharmacy formed IPA – Indian Pharmacy Association. The members of the association include MG, Net meds, Bookmeds, mChemist, Medlife, Pharmeasy, Medidart, Medstar, Zigy, save on medicals and save my meds.
Backed by its existing investors, Mumbai-based PharmEasy has so far raised over $650 million since April 2021. With this, it is now on its way to acquiring the diagnostic chain Thyrocare. What is interesting to note is that while PharmEasy is merely a six-year-old company, Thyrocare, on the other hand, has been around for over 25 years. However, Siddharth Shah, CEO of PharmEasy, cites the foundation of five co-founders for the same. “There is a ton of implicit trust that we have on each other,” he added.
The Genesis of the PharmEasy
Dharmil Sheth, the founder of PharmEasy, and his doctor pal, Dr. Dhaval Shah came up with the idea of building an online pharmacy. Both of them agreed on the potential of technology in the healthcare sector and it is this idea that primarily gave rise to PharmEasy in 2014. Presently, the company extends its supplies to nearly 98% of the Indian pin codes.
The company wanted to achieve the mission of doorstep delivery of everything related to healthcare, which it is always on the verge of achieving. Digitization has become an integral component of India’s healthcare industry. Be it scheduling a doctor’s appointment or delivery of reports and medicines, every step in the industry has been digitized. A major chunk of the credit goes to the e-pharmacies like PharmEasy for this initiative. The “health commerce industry” in India is growing at unprecedented rates courtesy of these e-pharmacies.
PharmEasy has successfully met its objectives of making doorstep delivery of healthcare accessible throughout the country. It has been a key player in the recent digitization of India’s healthcare industry. Every step of healthcare today — from scheduling doctor’s appointments to the delivery of medicines and reports — has been digitized. A huge chunk of the credit for the unprecedented growth of India’s healthcare e-commerce industry goes to online pharmacies like PharmEasy.
Working of PharmEasy
PharmEasy operates as an e-commerce platform where individuals can purchase healthcare-related equipment including medicines. The customer must upload their prescription to PharmEasy which will be sent to a drugstore in their vicinity. The company then uses web technology on its mobile app to provide customers with the highest quality health care products at the most budget-friendly rates.
Some might assume that discounted products imply a reduction in quality, but this is not the case. In fact, the discounts have nothing to do with a compromise in quality. PharmEasy simply proves its customers with the most top-notch products that one can generally find in medical stores and reputed pharmacies.
Once your medical prescription is sent by PharmEasy to a drugstore in your area, your order is packaged. A delivery agent will then collect your medicines from the drugstore. The delivery agent must adhere to all sorts of guidelines and precautions. The delivery agent will deliver the order to your doorstep which is the address you enter into the PharmEasy India mobile app or website.
PharmEasy Business Model
PharmEasy delivers medicines and other medical accessories across Indian towns and cities. It is like Grofers for medicine. The pin codes maintained by PharmEasy are used to identify pharmacies closest to the customers. Customers can either access PharmEasy’s website or use its mobile app to order items. They are entitled to discounts of up to 20% if they order using the mobile app, which further increases the brand recognition and adds in new customers to PharmEasy.
PharmEasy is an e-pharmacy, the processes of which are mostly online acting as a 3-way chain between the buyers, suppliers, and the distribution network.
Buyers – PharmEasy is a ready platform from which the buyers can search for their medicines or healthcare accessories and buy them online without any hassles.
Suppliers – PharmEasy collaborates with a wide range of local suppliers and medical shops, all of which help the company to arrange their stocks and keep them live online. Besides, the company also earns revenue from various pharmaceutical companies that want to showcase their products online and on the PharmEasy app as featured brands.
Distribution channel – PharmEasy operates with a vast distribution spread out all across the nation. This helps the company to deliver their products for a broad range of pin codes all over India.
Challenges In The Journey
Like any other e-commerce startup, PharmEasy has suffered through its own set of problems to become the large e-pharmacy it is today. The first major problem that they encountered was related to supply chain logistics. The healthcare supply chain lacks digitized records and over 80% of the pharmaceutical segment has never used computers or computerized billing. This posed problems like keeping track of products, patients, and the use of medicines. To overcome this challenge, they ensured that every retailer they work with has digital records and a proper system. They assist them to become digitized by offering inventory management and accounting tools. This helps keep a track of everything along with the manufacturer and the distributor.
The second challenge that the two-faced along their journey was the lack of support from the regulators. People fail to realize that it is very important today to introduce digital models and platforms in this sector to track the movement of products, maintain records and databases to ensure that the medicines and equipment are being used rightly. The company is continuously engaged in discussions with the regulatory bodies regarding the rules for e-commerce platforms in the healthcare sector and suggesting reforms that will benefit society.
The third major challenge was that of the customer’s mindset. During the early days, it was very difficult for the firm to gain people’s trust and assure them that the supply of medicines and equipment is coming from trusted sources. Along with changing their mindset, it was also important for them to educate people about the importance of buying only prescribed drugs and medicines. They were able to devise their business model and use various strategies to overcome these obstacles to write their success story.
PharmEasy – Acquisitions
The last company that PharmEasy has acquired is a Bangalore-based healthcare supply chain management company, Aknamed. The latter has approved the selling of 975,937 equity shares at Rs 3,155.94 to API Holdings in order to raise around Rs 308 crores (around $42 million) from the parent company of PharmEasy, according to the regulatory filings. Furthermore, the company has also reportedly bought out the stakes from the top 5 promoters of the company including its co-founders, who held around 50.67% stakes. Aknamed will now behave as the subsidiary of the PharmEasy parent, API Holdings Pvt Ltd.
PharmEasy has previously acquired 66.1% stakes in Thyrocare, Mumbai-based Indian diagnostics, and preventive care laboratories, in a Rs 4,546 crore deal on June 26, 2021. Docon Technologies Pvt Ltd, a subsidiary of the parent company of PharmEasy, API Holdings, has been the acquirer.
Aknamed – A healthcare company that strives to streamline the supply chain of the industry in India. PharmEasy has acquired Aknamed on September 14, 2021. PharmEasy acquired the majority stakes of Aknamed for an initial investment of Rs 308 crores ($41.90 mn). The company will be acquiring Aknamed completely in a few months in a deal size estimated to be around Rs 1000 crores ($136.04 mn).
Thyrocare technologies – Thyrocare is a fully automatic diagnostic laboratory, which claims to be the first of its kind in India. PharmEasy acquired Thyrocare on June 26, 2021. In a definitive agreement where the company has acquired 66.1% stakes in Thyrocare, the deal size is mentioned at Rs 4564 crores ($620 mn).
Medlife – Medlife is an online medicine supplier from Bangalore, India, which has facilities for home delivery. Medlife was acquired by PharmEasy on August 18, 2020. The company acquired majority stakes in Medlife valued at $250 million.
PharmEasy – Growth and Revenue and future plan
The company is witnessing massive growth. The company has nearly doubled its revenue from Rs 340 cr in the past financial year to around Rs 737 cr in FY20. Impressive! Dhaval Shah and Dharmil Sheth are playing a major role in this growth through excellent leadership and superior decision-making. As per the financial reports of the fiscal year 2021, PharmEasy has set another record of growth with a 220% jump to collect Rs 2,360 cr worth of revenues in FY21 from Rs 737.4 cr that it witnessed during FY20.
The expenses of the company also ballooned along with the revenues to become Rs 2,980.9 cr in FY21 from Rs 1,084.4 cr in FY20, which marks a 147.8% rise. Speaking of profit and loss, PharmEasy has been piling on its losses, which rose around 91% to become Rs 641.3 Cr in FY21, from Rs 335.2 Cr that it posted during FY20
Furthermore, PharmEasy has also announced that it would be looking for a pre-IPO fundraise of up to INR 1,250 Cr via private placement after consulting with the BRLMs (Book running lead manager). However, according to the latest news, PharmEasy is looking to slash its IPO valuation considering the volatility of the current market, as of February 19, 2022. PharmEasy currently partners with over 60K brick and mortar pharmacies from across the country and has served 20 million + patients since it was formed.
