
26-08-2022
API Holding Research report
PharmEasy
is a consumer healthcare Company that provides consumers with on-demand, home
delivered access to a wide range of prescription, OTC pharmaceutical, other
consumer healthcare products, comprehensive diagnostic test services, and
teleconsultants. Pharmeasy was founded in year 2015 by founder Dharmil Sheth
and Dr. Dhaval Shah. API Holdings through its latest acquisition is try to
build an integrated digital healthcare platform, where the company offers
teleconsultation; diagnostics and radiology tests; and RedBook, an enterprise
resource planning (ERP) and customer relationship management software for
pharmacies. It also provides call center management, medical and legal
transcription, data processing, warehousing, and database management services.
They are India’s largest digital healthcare platform (based on GMV of products
and services sold for the year ended March 31,2021), according to RedSeer
Report.
Products and Services:
1.Sale of Products: PharmEasy sell pharma, OTC and private label
medical products, surgical and consumables procured from pharmaceutical
companies to (i) distribution to retailer, (ii) distribution to chemist and
institutions and (iii) Aknamed which we acquired in September 2021. As per
RedSeer Report, we are the second largest buyer of pharmaceuticals among pharma
wholesalers and retailers, in India, as of financial year 2021.
2. Sale of Services: GMV from sale of services was ₹32,451.61 million
and ₹14,814.40 million
in Fiscal 2021and three months ended June 30, 2021. This includes GMV primarily
from (i) diagnostics services, and (ii) 3P GMV.
Highlights of Financial Performance:
·Revenue from operations has grown 249% in FY21.
This strong growth in consolidated revenue is also due to their latest investment
in thyrocare and Medlife.
· EBITDA Margin improved from -57.85% in FY20
to -24.4% in FY21
· API Reported loss of ₹ 641 cr, in FY21
which saw a growth of 91%, loss in FY20 was ₹ 335.95 Cr.
· Company reported ROE of -18.50% in FY 21.
· On consolidated basis company reported cash
flow of ₹ -813.6Cr. and
free cash flow of ₹ -844.56 Cr. in FY 21.
Strengths:
· API Holding is a one stop shop in pharmacy
market as they are into medicine supply to retailer and wholesaler, offers
teleconsultation; diagnostics and radiology tests.
· The company has a first mover advantage in
the industry due to which it has captured a wider market than any of its peers
Risks:
· Biggest Risk is company constantly making losses and are regularly diluting their equity to fund those losses.
Aknamed: Aknamed is streamlining the healthcare supply chain in India
which was founded by Saurabh Pandey and Mahadevan Narayanamoni in 2018. Mayank
Kapoor, Shaunak Joshi and Varun Vohra later came on board as co-founders.
PharmEasy has spent around Rs 380 crore to acquire stakes of Aknamed cofounders
and angel investors. Post the fresh allotment of shares, PharmEasy has a total
67.3% stake in Aknamed followed by Lightstone Fund with a 31.3% stake.
Thyrocare: API Holdings Ltd (API), the parent firm of PharmEasy,
announced the signing of definitive documents to acquire 66.1 per cent stake in
Thyrocare from A Velumani and affiliates at Rs 1,300 per share. This stake
purchase is valued at Rs 4,546 crore. Besides, API will acquire an additional
26 per cent in Thyrocare via a mandatory open offer and is offering Rs 1,788
crore for the same. Velumani founder of Thyrocare will be separately
acquiring a minority non-controlling stake of less than 5 per cent in API as part
of a series of equity investments by existing and new investors of API.
Medlife: Medicine e-tailer PharmEasy has bought
Medlife for an undisclosed amount, marking the largest consolidation in the
domestic online pharmacy sector. As per the deal, Medlife users will become
PharmEasy customers with Medlife discontinuing operations from now. The merged
entity will now serve around 2 million customers every month.
Pharmeasy Funding |
||||
Funded By |
Funding Amount |
Investment Date |
Funding Round |
Fund Name |
VestinWolf Capital Management |
Undisclosed |
01-Nov-21 |
- |
Private Equity Round |
Trifecta Capital Advisors |
Undisclosed |
20-Oct-21 |
- |
Debt Financing |
IIFL Finance |
- |
18-Oct-21 |
Secondary |
- |
Steadview Capital |
$ 204 M |
18-Oct-21 |
- |
Venture Round |
Arokiaswamy Velumani |
$ 500 M |
07-Jul-21 |
- |
- |
B Capital Group |
$ 20 M |
17-Jun-21 |
Secondary |
- |
Prosus Ventures, TPG Growth |
$ 390 M |
07-Apr-21 |
Series E |
- |
Temasek Holdings |
$ 220 M |
27-Nov-19 |
Series D |
- |
Eight Roads Ventures India |
$ 50 M |
26-Sep-18 |
Series C |
- |
InnoVen Capital |
₹ 450 M |
11-Sep-18 |
- |
Debt Financing |
Global E Pharmacy Market Size:
As per the
report, the global ePharmacy Market (Online Pharmacy Market) is estimated to
grow to USD 107.5 billion by 2027 from USD 49.43 billion in 2022, growing at a
CAGR of 16.81% between 2022 to 2027. Increasing the prevalence of the internet
of things worldwide and the growing use of smartphones and tablets are the key
factors driving the global online pharmacy market demand. The adoption of
online pharmacies is growing significantly worldwide due to the ongoing
COVID-19 pandemic. Thus, boosting the growth rate of the ePharmacy market. Online
Pharmacy will be the next huge innovation that will impact billions of lives
and make a healthy behavioral change safer and more convenient tomorrow. It is
one of the technological innovations that has positioned itself as an
attractive model in the online healthcare sector, which is expected to generate
huge demand in the future
Indian Healthcare
Market:
The Indian online
pharmacy market is estimated to grow at a CAGR of 20.1% during the forecast
period. The Indian pharmaceuticals market is the third largest in terms of
volume and in the top 15 in terms of value, globally. The growth in
pharmaceutical market will be majorly driven by the high burden of disease,
good economic growth leading to higher disposable incomes, improvements in
healthcare infrastructure, and improved healthcare financing, to name a few.
Online pharmacy
is at its nascent stage in India, but like other categories, has the potential
to be a very large industry segment in the near future. The online purchase of
medicines is gaining momentum in India. The advent of online pharmacy retailers
in the Indian market will further increase the penetration of the organized
pharmacy segment. It is expected that the online pharmacy model could account
for 15%-20% of the total pharma sales in India over next 10 years, largely by
enhancing adherence and access to medicines for a majority of the under-served
population.
The Indian online pharmacy market is segmented based on medicine type. Based on medicine type, the online pharmacy market is segmented into OTC medicines and prescription medicines. OTC medicines is leading the medicine type segment by a large margin, whereas the prescription medicines is the fastest growing segment in India. Currently, many online pharmacy players that include 1 MG, Amazon.com, Inc., Netmeds Marketplace Ltd., PharmEasy, and Practo Technologies Pvt. Ltd. operate in this segment.
(Source: omrglobal.com, World Bank, DRHP)
Founder:
Siddharth Shah is
the Co-founder, Managing Director and Chief Executive Officer of the Company: He holds a bachelor’s degree in computer
engineering from the Dwarakadas J. Sanghavi College, Mumbai and a post graduate
diploma in management from the Indian Institute of Management, Ahmedabad. He
was associated with Ascent Health and Wellness Solutions Private Limited as its
managing director. He has been a Director on our Board since August 27, 2020.
Dharmil Sheth is
a Co-founder and Whole-time Director of the Company: He holds a bachelor’s degree in electronics
engineering from the K.J. Somaiya College of Engineering, University of Mumbai
and a post graduate diploma degree in management (marketing) from the Institute
of Management Technology, Ghaziabad. He was associated with MakeMyTrip (India)
Private Limited as a part of the online products team, and with 91Streets Media
Technologies Private Limited as director and co-founder. He has been a Director
on our Board since September 9, 2021.
Board Member
Aditya Puri is
the Chairman and a Non-executive Director of the Company: He is a chartered accountant and an
associate member of the Institute of Chartered Accountants of India, New Delhi.
Previously, he has been associated with HDFC Bank Limited as its managing
director. He has been a Director on our Board since April 20, 2021.
Harsh Parekh is a
Co-founder and Whole-time Director of the Company: He holds a master’s degree in business
administration from the School of Business Management, Narsee Monjee Institute
of Management Studies, Mumbai. Previously, he was associated with Bharti Airtel
Limited. He was also the Chief Operations Officer of Ascent Health and Wellness
Solutions Private Limited. He has been a Director on our Board since July 1,
2019.
Ashutosh Sharma
is a Non-Executive Director of the Company:
He holds a master’s degree of business administration from the University of
Chicago, Booth School of Business, Illinois. He was associated with Norwest
Venture Partners, Qualcomm India Private Limited and is currently associated
with MIH Internet Private Limited (a Prosus Company). He has been a Director on
our Board since April 5, 2021.
Ankur Thadani is
a Non-Executive Director of the Company:
He holds a bachelor’s degree in electronics and telecommunication engineering
from the University of Mumbai, Maharashtra. He is associated with TPG Growth
and RISE Fund as a partner. He has been a Director on the Board since March 2,
2021.
Deepak Vaidya is
an Independent Director of the Company:
He is a chartered accountant and an associate member of the Institute of
Chartered Accountants of India, New Delhi. He is on the board of various
companies in the pharmaceutical, hospitals, and finance sector. He has been a
Director on our Board since April 20, 2021.
Vineeta Rai is an
Independent Director of the Company: She holds a
bachelor’s degree in arts (history honours) from the University of Delhi, New
Delhi. She is a retired Indian Administrative Officer (Batch of 1968) and has
an experience in the fields of health administration and finance with work
experience in the Ministry of Finance, Government of India. Subramaniam Somasundaram is an Independent
Director of the Company: He holds a bachelor’s degree in commerce from the
University of Madras and is a chartered accountant and cost accountant with
experience in finance, strategy and business roles. Previously, he was
associated with the Titan Company Limited, as its chief financial officer.
Ramakant Sharma
is an Independent Director of the Company:
He holds a bachelor’s degree in materials and metallurgical engineering from
the Indian Institute of Technology, Kanpur and a post graduate degree in
management from the Indian School of Business, Hyderabad. He is a co-founder,
chief technology officer and chief operating officer at Livspace.com (Home
Interior Design E-commerce Private Limited), home interior and renovation
platform.
Government Initiatives:
Finance Minister Ms. Nirmala Sitharaman
announced an additional outlay of Rs. 197,000 crore which will be utilised over
five years for the pharmaceutical PLI scheme in 13 key sectors such as active
pharmaceutical ingredients, drug intermediaries and key starting materials.
Under Union Budget 2021-22, the Ministry of
Health and Family Welfare has been allocated ₹73,932 crore (US$
10.35 billion) and the Department of Health Research has been allocated Rs.
2,663 crore (US$ 365.68 billion). The government allocated Rs. 37,130 crore
(US$ 5.10 billion) to the 'National Health Mission’.
The Digital India Program was started by the
government in 2015 to digitally connect every corner of India including the
rural areas and remote villages with high-speed internet. Over the years this
program has increased the number of online users to a large extent and has
helped online businesses in increasing their consumer base. With the increase
in internet usage this is going to be beneficial for the company like online
pharmacy company.
To achieve self-reliance and minimise import
dependency in the country's essential bulk drugs, the Department of
Pharmaceuticals initiated a PLI scheme to promote domestic manufacturing by
setting up greenfield plants.
PM Aatmanirbhar Swasth Bharat Yojana was
allocated Rs. 64,180 crore (US$ 8.80 billion) over six years. The Ministry of
AYUSH was allocated Rs. 2,970 crore (US$ 407.84 million), up from Rs. 2,122
crore (US$ 291.39 million). This will assist healthcare related service
industries to grow in the long run.
OUTLOOK:
India’s domestic pharmaceutical market is
estimated at US$ 42 billion in 2021 and likely to reach US$ 65 billion by 2024
and further expand to reach US$ 120-130 billion by 2030.API Holding revenue
grew 250% in FY21, which was majorly due to a huge surge in the demand for
pharmaceuticals and healthcare products as a result of rise in pandemic.
Company is trying to become an integrated Pharmacy player with their recent
acquisitions like thyrocare and Aknamed, Thyrocare acquisition will allow it to tap a larger
market due to increased awareness on self-care and as the insurance penetration
increasing in India, people preference is also shifting to branded
diagonistics. Pharmeasy advantages (i) well-established brand, (ii)
genuine and good quality pharmaceutical products offering, (iii) wide product
offering, (iv) ability to achieve high fulfilment rates, (v) offering of
neighbourhood convenience with large store footprint, and (vi) ability to offer
competitive pricing to the customers, is likely to continue the gains in market
share.