[The Turning Point] From multiple pivots to an investor backing out, how unicorn PharmEasy found its niche

Pharmeasy may be riding on multiple highs today, but the journey was a hard wrung one. The startup pivoted close to four times, and has had investors pull out their term sheets to multiple pivots. It is today on a high growth trajectory and has already acquired the listed company, Thyrocare, besides recently acquiring Aknamed. 

Started in 2015, the startup was launched with a vision to deliver genuine medicines at affordable rates by optimising the supply chain and logistics. 

What helped was that the five founders- Siddharth Shah, Dharmil Sheth, Dhaval Shah, Harsh Parekh, and Hardik Dedhia, have been friends from childhood, and they always believed in each other and supported each other’s growth. 

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Siddharth says, “It is my failures that taught me the value of money, building the business. Nothing was easy for us. Everyone talks of our journey from 2015 when we started being successful. I don’t want to whitewash our history. The five of us made our mistakes, we built online pharmacies that had all the MAUs and DAUs but there was no revenue. We then went offline, we failed, and then with digital healthcare, we had four term sheets. We took one, but the investor backed out. Our families put in their personal wealth. My father put in Rs 21 crore into the business, and he doesn’t own a single share in the company.”

He explains that at every stage and shift in the company, they built a better product that has been in better shape at every step. 

Interestingly, despite an investor backout, PharmEasy had several backers that came on to support them after they focussed on rejigging their product and offerings. 

In fact, during the Thyrocare dream, the startup had ‘blind fundraising.’ In April this year, PharmEasy became a unicorn. It raised $350 million in a Series E round led by Prosus Ventures and TPG growth, at a reported valuation of $1.5 billion, making PharmEasy the seventh startup in India to enter the unicorn club this year. 

The new capital raised was a combination of primary and secondary funding, which also saw the participation of existing investors including Temasek, CDPQ, LGT Lightrock, Eight Roads, and Think Investments.

While this was big news, the team went on to raise funds in May and June as well to aid the acquisition. 

“But, we didn’t tell our investors what the money was used for, and they trusted us. We informed our stakeholders what we had raised the money for only 72 hours before the announcement of the deal,” recounts Siddharth. 

Currently, Pharmeasy is on a growth mode as it looks at healthcare in its entirety - consultations, delivery, and diagnostics. And the team believes one cannot be more important than the other, and all the verticals need to be built simultaneously. 

A few weeks back, the company announced that it had appointed five new independent directors including Subramanian Somasundaram, the former chief financial officer of Titan and Ramakant Sharma, founder and Chief Operating Officer of Livspace to its board. It now has 12 members on its board.