Mumbai-based e-pharmacy startup PharmEasy may sell a 7% stake to San Francisco-headquartered private equity (PE) firm TPG Capital as it looks to raise money to re-fill its war-chest against bigwigs like Amazon and Reliance, which entered the country’s fast growing medicine delivery segment this year.
While the deal size is still undisclosed, PharmEasy, which is backed by Orios Ventures, Temasek Holdings, Eight Roads Ventures India, and Bessemer Venture Partners, was reportedly in talks to raise USD 100 million each from TPG and Naspers at a valuation of USD 1.2 billion.
TPG has already sought the permission from the Indian competition watchdog Competition Commission of India (CCI) to incorporate a special purpose vehicle (SPV) in Singapore to carry out the proposed investment, local media Economic Times reported.
Citing regulatory filings with CCI, the report said PharmEasy’s parent company, API Holding plans to “use this financing to deepen its distribution network across India and build innovative technology-first products to connect the entire ecosystem and give affordable access to healthcare across India.”
Founded in 2015, PharmEasy has emerged as one of the bigger players in the online medicine delivery sector. According to data collated by Crunchbase, the company has so far raised USD 328.5 million.
After the pandemic struck the country in March, online pharmacy services saw a spike in demand during the lockdown as millions of Indians opted to order medicines and healthcare essentials online. The competition in the segment heated up in August when oil-to-telecom conglomerate Reliance acquired 60% stake in one of the leading digital pharmacy players, Netmeds, for USD 83 million, and American e-tailer Amazon kicked off is medicine delivery service.
The same month, PharmEasy joined hands with smaller rival Medlife for a merger to safeguard the joint market share against the bigwigs eyeing the digital pharmacy sector. In a deal that pegged the valuation of the combined entity at USD 1.2 billion, Medlife agreed to sell 100% shares to API Holdings, in return for 19.59% ownership in the merged entity. CCI has already granted approval for the merger.
The development comes at a time when USD 113 billion salt-to software Indian conglomerate Tata Group is reportedly looking to scoop up a majority stake in online medicine platform 1 mg, and Amazon is mulling to put in a USD 100 million check in Indian pharmacy chain Apollo Pharmacy.
According to Bengaluru-based consulting firm Redseer, the Indian e-health sector is expected to reach USD 2 billion in gross merchandise value (GMV) by March 2021. GMV indicates the total value of merchandise sold on an online platform and does not factor order cancellations. By the financial year 2025, the e-health players may clock an annual GMV of up to USD 19 billion. Of this, e-pharmacy, alone, is likely to reach a GMV of USD 13.3 billion by FY 2025.