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Making healthcare more accessible with PharmEasy

  • PharmEasy, an online pharmacy, experienced significant success in the healthcare industry with direct partnerships with manufacturers and retailers, rising to the pinnacle of online pharmacies in India.
  • To fund acquisitions and expansion, PharmEasy took on significant debt, leading to a deteriorating financial situation with a high net debt-to-equity ratio and increasing losses.
  • In an attempt to repay debt and sustain operations, the company borrowed from Goldman Sachs, but it faces challenges in meeting covenant conditions, potentially leading to the acquisition of the business and its lucrative division, Thyrocare, by Goldman Sachs.

Yes, you are reading and hearing the headlines right!! PharmEasy has its downfall! Well, now many of you must also be unaware of this PharmEasy chaos, and trust me when I say that this drama is no less than a daily soap show! It has all the elements of history, leverages, assets, slow motion, suspense, and most importantly DRAMA! 

But before we understand what this all fuss about, we need to understand the protagonist's character.

Take 1 (2015):  A bustling office at PharmEasy headquarters. The employees are busy with their tasks, and the co-founders, Dhaval, Dharmil, and Hardik, are gathered in a conference room. 

In the world of diet consciousness and health wellness, which is often considered to be a struggle, a beacon of hope emerged—PharmEasy, a game-changer in the realm of online pharmacies with many competitors in the game.

The camera pans to the co-founders, deep in thought.

Dhaval: (Determined) Our mission was clear—to bring accessible healthcare to every doorstep in India.

Dharmil: (Enthusiastic) And we knew we couldn't do it alone. We needed the support of like-minded individuals who believed in our vision.

Hardik: (Confident) So, we set out to find those who could not only invest in us but also invest in the well-being of our nation.

And thus began PharmEasy's journey to find its allies—investors who would play a vital role in shaping its future.

Yes, investors. I believe investors are more than just an angel to someone. They surely help you in tougher times, but in this show - the drama caused; revolves around a whole bunch of investors, their investments, and the character of the protagonist. 

What is PharmEasy all about?

In the dynamic world of healthcare, PharmEasy has emerged as a formidable force, dedicated to bridging the gap between offline sellers and online buyers. With a bold vision, PharmEasy has established direct partnerships with over 3,000 manufacturers and more than 90,000 retailers across India, ensuring efficient delivery of medicines to its customers.

This strategic move has positioned PharmEasy as a leader in the industry, making a significant impact on the healthcare landscape. In the current circumstance,  I don't think, it's right to say ‘the leader’ because my dear readers, the kingdom is in danger and the throne is almost on the verge of being taken over.

And oh, Yes, it indeed did succeed in establishing its brand value, with a staggering 12 million registered users and a whopping 17 million monthly active users, PharmEasy's parent company, API Holdings, rose to the pinnacle of online pharmacies.

Their revenues for the year ending March 2021 reached an impressive Rs 2,361 crore, overshadowing rivals 1mg, now under the Tata group's ownership, and Reliance-owned Netmeds, who posted revenues of Rs 134 crore and Rs 151 crore respectively. This battle of the pharmacy titans was one for the ages! (Forbes) After the fund raise of Rs 135 crore in April 2021, PharmEasy was definitely on cloud nine and decided to expand its business. 

Coming of two superpowers

This is the episode where characters of two different TV Shows come together to run the show and give it the title “Mahaepisode”. In this mahaepisode, the two different shows are Thyrocare and PharmEasy. It was broadcasted in June 2021.

In a stroke of luck, PharmEasy started a daring acquisition drive and bought a significant 66.1% ownership from none other than A Velumani, its promoter, in a successful testing diagnostics chain. The mind-blowing purchase, at a staggering Rs 4,546 crore ($612 million), cemented PharmEasy's leadership in the sector. But that is not where the narrative ends.

Despite parting ways with his creation, Velumani saw promise in PharmEasy and decided to invest Rs 1,500 crore ($202 million) to acquire a 5% ownership in the business. Due to the transaction's high cost, several loans were required to pay for this large acquisition as well as others. (Forbes

More investors?

But wait, from where did PharmEasy get $612 million? There the show has the entry of its supporting characters - Kotak Mahindra Bank, Aditya Birla Finance, and Hero Fincorp extended their support, albeit at interest rates ranging from 9 to 17%. 

Let’s, fast forward to 1 year to get rid of the suspense that lies ahead for this captivating pharmaceutical powerhouse.

As a result, according to data provider Venture Intelligence, the net debt of API Holdings, the parent company of PharmEasy, increased from Rs 262 crore in the year ended March 2021 to Rs 2,256 crore in the year ended March 2022. But, in this world, Santa Claus comes with bearing gifts which are not just happy but at times sadly happening too.

During the same time frame, its net debt-to-equity ratio deteriorated from 0.08 to 0.34. In the same period, revenues increased 2.5 times to Rs 5,781 crore, but losses increased more than 6 times to Rs 3,993 crore. 


This screams that there is a DEBT-SITUATION. So the trio decided to repay the debt and then borrowed $285 million from Goldman Sachs in August 2022 to pay off its debt. According to the senior employee previously mentioned, the loan contained a covenant requiring PharmEasy to raise equity in the range of Rs 1,000 crore (about $120 million), linked to its burn rate velocity, within a year of obtaining the loan. 

Although PharmEasy has not yet missed a payment, it will soon violate the covenant conditions with Goldman Sachs. The employee claims that because API Holdings' entire asset base was pledged as collateral for the loan, the covenant agreement permits Goldman Sachs to possibly acquire both the entire business and its most lucrative division, Thyrocare. 

Originally it would have been the founders but given the current conditions -  the shots are taken by investors. So, now the company has decided to lower its market value by 90% thereby sustaining and improvising its burn rates; which by the way, they did! They dropped down from 30 crores to 15 crores which was possible to lesser cash outlet by letting the employee go away. 

Well, as the title suggests rumors, there is news that there is an investment of 1000 crore incoming from Manipal Party while the rest of the money is being through the down round and profits earned through Thayocare. 

Not just that, such debt situations of rights issues encourage individuals, especially, businessmen, investors, and entrepreneurs to put up their views. One such view was seen recently on Twitter that went viral - by famous former Shark Tank India judge Ashneer Grover. 

Ashneer Grover Tweet

With this, we have different perspectives on the same subject from different individuals, unlike TV Shows. This whole chaos of rights issues, financial matters, takeover, and investments will one day reach an end - either in PharmEasy’s court or not! Maybe with the help of another angel investor or maybe not? Stay tuned!! 

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Edited by Shruti Thapa