Pharm easy- Startup Success story, Founders, Business model, Valuation, Funding

Medicines are a prime necessity in our life. However, because the pharma industry in India wasn’t much developed till 2000, leading to disorganization including the corrupted practices undertaken by middlemen leading to either highly-priced medicinal supplies or low-quality products. However, online digital platforms have brought a revolution in the wholesale and retail market pharma market in the country after the digitization of online grocery, beauty & apparel, the digitization of pharma products was evident. Now, after the online availability of medicines & supplies, it has brought huge comfort & convenience for people, especially at the time of the Covid-19 pandemic around 2020 & in early 2021, when there were restricted movements in all states across India. All they need to just, go to the digitized platform, upload the prescription and order the medicines from a wide range of e-commerce medical stores and get them delivered it anytime or anywhere.

PharmEasy is an online digital platform that is working towards bringing ease & afford convenience to its customers to get their medical prescriptions delivered at their home without any hassle by bringing innovation through the use of data & technology. Through data & technology, it aims to create a robust health and well-being ecosystem by creating a network of various local pharmacy stores and outlets by leveraging data & technology to strengthen the healthcare infrastructure in India.

The online medical retail start-up was founded mutually by its co-founders Dharmil Sheth and Dr. Dhaval Shah in the year 2014 under its parent company, 91streets Media Technologies/API Holdings Private Limited, and has its headquarters in Lal Bahadur Shastri Marg, Mumbai, India. With more than 150 partner vendors, it is present in more than 1000+ cities in India at more than 22000+ pin codes that include cities like Delhi, Mumbai, Ahmedabad, Kolkata, Pune, Jaipur, and Bengaluru and is one of the most successful healthcare start-ups in India. Additionally, PharmEasy boasts of more than25 a million registered users, undertaken and completed more than 8.8 million orders along with 2.4 million transacting customers till Jun 21. It also became one of the start-ups to make to the list of unicorn start-ups list for the FY21 and the business valuations

Stands at $5.4 Billion (as of February 2022) and generated a revenue of  $315.99 million (Rs 2360 crore) in FY21.

What led to the inception of PharmEasy?

The pharma industry has been perceiving decent growth empowered by the penetration of the new-age technologies and data through the internet in recent years. Further, it is expected to grow at a CAGR of 12% to reach $130 billion by 2030 from $41.7 billion in 2020. Dharmil Sheth along with his friend Dhawal Shah observed that around 2014 the healthcare industry in India had huge business potential with the advent of e-retail businesses like Flipkart & Amazon. They were quite aware of the challenges faced by the healthcare system & the pharma industry in India and believed that only technology can help India to tackle the challenges in the healthcare system by making healthcare services and access of medicines accessible and affordable, and the idea of building an online pharmacy with a reach all over India seemed an incentivizing business opportunity.

They founded PharmEasy in the year 2014. It is an e-commerce platform for the purchase of medicines and other healthcare-related necessities by connecting the customer to the nearest local vendors after a customer uploads his prescription on the PharmEasy platform by making use of customer data & novel technologies to offer the best quality and affordable medicinal products. Since its inception, it has been a key player in the recent digitization of India’s healthcare industry and is responsible for the unprecedented growth of India’s healthcare e-commerce industry.  Though initially, customers were reluctant over online delivery of medicines due to concerns over the quality, slowly the stigma fade off.

So, how does it works? Once the customer accesses the PharmEasy Platform, he needs to upload his medical prescription online and gets connected to the nearest local drugstore through which he can make his orders. Once an order is placed, a delivery agent collects the prescription in strict adherence to the quality & quantity guidelines. The order is packed and gets delivered to the customer’s doorstep.

Pharmeasy- Founders & the Team

Dharmil Sheth is the co-founder of PharmEasy and has founded several other businesses namely, API Holdings, Ekagrata, 91streets, etc. with other co-founders before launching the PharmEasy business. He has completed his graduation in electrical engineering and an MBA degree from IIM Ghaziabad. After completing his masters, he worked for a brief period in reputed companies like Techno Gravity Solutions and MakeMyTrip.com as a Business Developer and as a Summer Intern respectively.

Dr. Dhaval Shah is the other co-founder of PharmEasy after completing his MBBS degree from Rajiv Gandhi Government Medical College and an MBA degree from XLRI Jamshedpur. After completing his master’s, he worked for a brief period as a Consultant at McKinsey & Company before co-founding businesses like API holdings & PharmEasy with Dharmil Sheth. Dhaval Shah and Saumil Parekh are the two key executives who have been instrumental in their role behind the launch of India’s best healthcare delivery business.

Pharmeasy- Business & Revenue Model

PharmEasy works on a business model similar to that of grocery delivery applications like Grofers & Zepto. The platform serves in more than 22000+ pin codes across all the major cities and small towns in the country and these pin-codes help PharmEasy to locate the nearby pharmacies and drugstores to the customers purchasing the platform. For enhancing customer engagement, PharmEasy offers discount offers such as 20% off on first orders through mobile app helping the PharmEasy business to acquire more new customers. With time, PharmEasy has been dispelling the notion that online medicinal products can never be of relevant quality and affordable prices.

PharmEasy business model works through a network created between the Customers, Suppliers, and distributors in a manner as provided below-

• Customers- Customers wishing to purchase medicines & related products can access PharmEasy the e- platform to search, order, and get the same delivered them online without any hassle.
• Medical Suppliers & Retailers – Medicines are of utmost requirement and timely delivery is very important to customers to establish trust among buyers. Therefore, to ensure affordable medicines with fast delivery, Pharm Easy collaborates with local medical supplies stores and shops who help the business to arrange stocks and promise their online availability.
• Distribution channel – Again to ensure faster & efficient distribution of the medicinal products & supplies, PharmEasy has a vast distribution network that is spread across all major cities and towns around 22000 pin codes all over India which is further on expansion mode.

PharmEasy – Revenue Model

Primarily, PharmEasy generates its revenue through advertisements of pharma companies who wish to promote their products by listing & displaying them on the platform and the PharmEasy app as featured brands. Advertising is another major source of revenue for the business which helps it to acquire new customers. Similarly, attractive offers and discounts help it to retain its existing customers in the market.

Furthermore, PharmEasy earns commission from the medical suppliers and retailers who sell their products through the platform and similarly a delivery fee from the customers for delivering these products at home. Thus, provided below are the four major sources of revenue for PharmEasy-

• Commission from pharmacies & healthcare product sellers,
• Delivery Charges on the delivery of medicinal and healthcare products;
• Advertising commission/charges for promoting products of pharmaceutical entities and healthcare brands, and
• Providing Lab tests at home facilities;

Some of the leading competitors are –Apollo Pharmacy, Tata 1Mg, Ranger Health Medibuddy, Myra Medicines, Hello Heart Brown Packet, and more. PharmEasy has grown significantly in the years since its inception, as compared to its competitors has been able to keep its losses in check.

The company is witnessing massive growth since its inception with a nearly double increase in its revenue from Rs 340 crores in the past financial year to around Rs 737 crores in FY20 with a nearly three times increase in revenue in FY21. Impressive indeed!

However, the business has also suffered a lot of losses in these financials years that increased rose around 91% from FY19, from Rs 335.2 Crores to reach Rs 641.3 Cr in FY21.

Pharmeasy- Funding & Financials

To date, PharmEasy has raised a total of $1.6B in 14 rounds and the latest funding was raised on Nov 1, 2021, from a Private Equity round from VestinWolf Capital Management and Trifecta Capital Advisors.

In June 2021, it raised a sum of $500 million in the Series F funding round led by Arokiaswamy Velumani that led the start-up to achieve its unicorn status making its valuation reach $1.8 billion in June 2021. Further, in a pre-IPO round, it raised funding worth $354 million split in two rounds. In the first round, it received a total funding of $204 mn from a bunch of investors like Amansa Capital, Steadview Capital, OrbiMed, Abu Dhabi’s sovereign wealth fund ADQ, etc. Whereas, in the second round, the company saw a capital infusion of Rs. $150 mn from some partial exits by angels investors & some other early-stage investors like Fundamentum, Eight Roads Ventures, Bessemer Venture Partners, and others. Further, PharmEasy has also reported that around 20 senior employees, five founders, and some of the new investors have picked secondary shares at a valuation of $5.6 Bn.

Further, PharmEasy is also planning to bring its IPO in the early FY22 as it intends to raise Rs. 6250 crores through the fresh issue of shares, it has even got approval from the SEBI after it filed it’s Draft Red Herring Prospectus (DRHP).

Pharmeasy- Acquisitions & Investments

Since its launch, Pharmeasy has acquired three businesses namely- Aknamed, Thyrocare, and Medlife. It has invested in BeatO in funding round B at a valuation of Rs. 420 million on Jul 7, 2021. Provided below is the list of the businesses so acquired by PharmEasy along with other details-

• Aknamed – Aknamed is a business headquartered in Bangalore, India, and is essentially a healthcare supply chain management company. PharmEasy has acquired a majority stake (66.1 %) in the Aknamed business for a sum of Rs. 308 crores ($42 million). Presently, Aknamed is a subsidiary of the parent company of PharmEasy namely, API Holdings Pvt. Ltd. PharmEasy is further planning to acquire a 100% stake in the business soon for an amount of around Rs 1000 crores ($136.04 mn), to make it a wholly-owned subsidiary of API Holdings Pvt. Ltd.
• Thyrocare technologies – It is another business to be acquired by Pharmeasy for its unique business model & USP. It is the first-ever fully digitized automatic diagnostic laboratory in India which offers services like health check-ups, lab tests, organ profile tests, etc. PharmEasy has acquired around 66.1% stake in the business for a sum of Rs 4564 crores ($620 mn) on June 26, 2021.
• Medlife – Medlife is an online medicine supplier business based in Bangalore, India which primarily offers medicines delivery at-home services. PharmEasy’s parent company API Holdings acquired a 100% stake in the Medlife business at a valuation of $250 million on August 18, 2020, and agreed to transfer a 19.95% stake in the PharmEasy business to the promoters of Medlife.

PharmEasy – Business marketing strategy

Since the beginning, the co-founders and team have taken care of marketing functions and have a robust system in place. Due to this customer retention and acquisition have never been a challenge for the business after overcoming initial slowdowns. PharmEasy’s online platform enjoys significant traffic on its website out of which 63.39% is generated from platform searches. Additionally, 30.97% is the direct traffic, 0.72% is generated from social media platforms, 3.29% from online visibility, 0.66% from email marketing, and 0.97% from referrals for the business. Besides, some of the marketing tactics employed by Pharm Easy includes-

i. Ad Campaigns & TV commercials- PharmEasy has published various TV ads & commercials to attract its audience and has gained popularity among customers. One of the tagline slogans says “‘PharmEasy- Take it easy!’ with a popular Bollywood song music to gain consumer attention.

ii. Social media marketing & meme marketing- Social media marketing along with meme marketing is employed by the business on its social media channels like Instagram, Twitter, and others to engage customers in a creative and quirky manner. Meme marketing is another one that is often used by business start-ups like Zomato to maintain marketing with trends and PharmEasy is leveraging from the same.

iii. Email Marketing- To ensure that the customers who have once availed PharmEasy services come gain or even refer the services to a new customer, PharmEasy uses email marketing to notify any exclusive offers or discounts through SMS or email alerts.

iv. Events Sponsorships- It was not easier for PharmEasy to earn a market share in the e-medical & pharma industry. Thus, it used event sponsorship strategies such as cricket sponsorship considering the fan-following enjoyed by cricket in India, and placing ads between breaks helped it to gain customer attention successfully.

v. Influencer marketing- PharmEasy also used influencer marketing to promote its products and services including its offers through Instagram & YouTube channels by making short videos & reels to ensure better customer engagement & hence better sales. Viraj Ghelani (Digital Creator) and Sapan Verma (Comedian) are two influencers who have done influencer marketing work for the company.

vi. Covid-19 marketing strategy- Covid-19 pandemic made businesses change their ways of operating businesses and try new things to persuade customers towards various brands & products. Similarly, PharmEasy also did ad campaigns related to Covid-19, by taking a sarcastic approach with the tagline “Sab uparwale ke hath me hai!” not to mean god, but the neighbor living upstairs for the brand promotion of PharmEasy. Yet another ad showed while everything had changed with the pandemic problem, getting quality medicines at home through PharmEasy has never changed.

Therefore, it could be safely said that the success and the popularity being enjoyed by PharmEasy is a result of its diversified and efficient marketing strategies with the ads being short, appealing, and relatable.

PharmEasy- Challenges & Future Plans

It’s a known fact that challenges are a part of the success story for any business and PharmEasy offers a brilliant example for this. It started as an e-pharmacy store and expanded itself to be a unicorn start-up business as it is today. The two primary challenges faced by the company were –

i. Problems with online Prescriptions-The first and foremost challenge faced by the company was the reluctance on the part of the customers to provide prescriptions due to privacy issues and providing medicines based on the names quoted by the customer without a valid prescription was even riskier and not enough to deliver products to them.

ii. Tracking Delivery Agents online-In addition to this problem, the company faced the problem to track the location of the delivering agent which was of utter importance for customer acquisition and building consumer trust.

PharmEasy is now looking to expand its online presence among Tier 2 & Tier 3 cities and offline presence by entering into tie-ups with more than 60 thousand brick and mortar pharmacies from across the country. Its competitors like Apollo Pharmacy are trying to boost the overall sales via their online platform along with their brick and mortar stores on one side and reinforcing their online delivery system of medicines on the other side, but most of them are trailing. Due to the exceptional growth achieved by the business in these years, PharmEasy rewarded its five co-founders namely, Siddharth Shah, Dharmil Sheth, Hardik Dedhia, Karsh Parekh, and Dhaval Shah ESOP options through a special resolution under which it shall allot 79,987 ESOPs to each of the five co-founders leading to the collective worth of all the co-founders to reach Rs 236 crores. The company is also planning to make its debut on the public stock exchange of India by bringing its IPO in the year 2022. Despite having so many competitors like 1mg and Apollo, PharmEasy is leading them all in the competition among all these businesses and has established its strong position in the market within such short time as compared to Ranger Health (in the US) which has received lower funding and employs lesser employees than PharmEasy. It has made the process of accessing quality medicines & health essentials simple, easier & convenient for its people. It has served effortlessly to people, especially during the pandemic, and has achieved a valuation of $5.2 Billion at present.