India’s largest e-pharmacy platform PharmEasy is preparing to submit drafts prior to an initial public offering (IPO) later in the fiscal year, sources said.
This comes at a time when talks with Japan’s SoftBank over a new round of funding have failed, sources familiar with the development told ET.
PharmEasy is on track for an IPO but is still negotiating with new investors to raise between $ 200 million and $ 300 million on a valuation of around $ 5.6 billion, the sources added.
API Holdings, which operates PharmEasy, was valued at $ 4.2 billion in June.
It was not immediately clear who the potential new investors were and whether such an investment would be completed before the draft Red Herring Prospectus (DRHP) was filed with the Securities and Exchange Board of India (Sebi). API Holdings is partnering with JM Financial and Kotak Investment Banking for the DRHP, as the two banks managed the acquisition of the diagnostics chain Thyrocare in June.
In the past few months, the company has raised over $ 650 million from investors such as Prosus (formerly Naspers), B Capital, TPG, and others.
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The last man is standing
“PharmEasy wants to set a new benchmark before going public,” said an expert.
“They want to come up with IPO papers by October and then list them over the next few months. It may spill over to next year, but the goal is to have a list before the end of the current fiscal year,” added another person.
The conversation between SoftBank and PharmEasy that has been going on for the past few months has stalled, as PharmEasy’s promoters are looking at a valuation of well over 5 billion US dollars.
“That did not happen and it is unlikely that both parties will return to the negotiating table. SoftBank is not moving forward,” revealed one of the sources.
API Holdings CEO Siddharth Shah declined to comment. A spokesman for SoftBank India did not respond to ET’s email by Thursday’s press deadline.
The last man is standing
After Reliance Industries bought more than 60% of the shares in the e-pharma startup Netmeds last year and the Tata Group acquired 1 mg in June, PharmEasy is the only remaining large independent player. It bought smaller rival Medlife last year, though the deal wasn’t officially closed until earlier this year.
PharmEasy’s IPO plans also coincide with the success of the July IPO of the food delivery app Zomato, which paved the way for Indian online companies to go public this year.
Over half a dozen startups have filed for initial public offerings in the domestic market, including Paytm, PolicyBazaar, and Nykaa.
Because of the increased liquidity, PharmEasy would attempt to raise with a significant jump in valuation between $ 800 million and $ 1 billion, said people well aware of the company’s mindset.
The company is currently in the final stages of completing its open offering
“The company doubled the number of doctors and pharmacists in the last year, so they are confident that their rating has risen well,” said this person. “It will be clearer once Thyrocare’s open offer ends.”
PharmEasy is also considering whether a merger with Thyrocare would make sense, as the diagnostics chain is already listed.
“Since Thyrocare is a public company, there are so many disclosures to be made. So that’s one of the options that are currently being considered, ”said one of the sources.
The online pharmacy market in India will grow from around $ 360 million in 2020 to around $ 2.7 billion by 2023, EY said in a report last year.
The Mumbai-based company has also launched faster drug deliveries to key markets with its “priority” delivery service that delivers drugs in three to four hours for a fee.
PharmEasy did not refer to it as “express delivery” as it is commonly referred to in the online consumer internet space.
ET reported in June that Tata-owned 1mg was also working to start hour-long deliveries and that it was delivering many orders in four to five hours from Delhi and Gurugram.
Typically, e-pharmacies deliver the majority of online orders within 24-48 hours, as they also come from chronic patients who plan their orders in advance.
A variety of e-commerce companies, especially those that sell groceries, promise quick deliveries between 10-30 minutes.
In addition to delivering medication and booking diagnostics, PharmEasy is also increasing its commitment to online doctor consultations. A recent report by Praxis Global Alliance said the Covid-19 pandemic accelerated teleconsultation growth in India and had a market size of $ 163 million in March. This is expected to grow to $ 800 million by March 2024.