PharmEasy, the Mumbai-based ePharmacy startup, marked a significant milestone as its operating revenue surpassed the INR 6,000 Crore mark in the financial year concluding on March 31, 2023. This unicorn reported a substantial 16% surge, reaching an operating revenue of INR 6,643.9 Crores in FY23, demonstrating notable growth from INR 5,728.8 Crores in the preceding fiscal year.
Established in 2015 by Dharmil Sheth, Dhaval Shah, Harsh Parekh, Siddharth Shah, and Hardik Dedhia, PharmEasy operates as an online platform for the sale of medicines and provides diagnostic test services through its subsidiary entities.
The startup predominantly derives its revenue from the sales of medicines on its marketplace. In the fiscal year 2022-23, it achieved a total revenue of INR 5,925.3 Crores from the sale of pharmaceutical and cosmetic products, and an additional INR 701.2 Crores from diagnostic and other services. In the preceding fiscal year (FY22), the earnings from medicine sales amounted to INR 5,229.9 Crores, while the revenue from diagnostic and other services reached INR 417.8 Crores.
Taking into account other sources of income, the total revenue for the startup reached INR 6,699.7 Crores, reflecting a 15% growth compared to the INR 5,781 Crores reported in the preceding fiscal year.
Nevertheless, there was a notable surge in net loss, rising by over 31% to INR 5,211.7 Crores in FY23 from INR 3,992.4 Crores in FY22, primarily attributed to an impairment loss of INR 2,921.9 Crores incurred during the review period. When excluding the impact of the impairment loss, PharmEasy’s net loss exhibited a 16% decrease, amounting to INR 2,289.8 Crores in the year under review as opposed to INR 2,731.7 Crores in FY22.
The startup witnessed a modest 6% growth in total expenditure, reaching INR 8,974 Crores from INR 8,491.5 Crores in FY22.
PharmEasy’s Revenue Breakdown in FY23:
The startup’s procurement cost constituted about 63% of the total expenditure. In FY23, there was a 12% increase in PharmEasy’s procurement cost, amounting to INR 5,730.8 Crores, compared to INR 5,113 Crores in the previous year.
The startup successfully reduced its employee cost by 12%, achieving INR 1,283.3 Crores in FY23 compared to INR 1,458.9 Crores in the preceding fiscal year. It’s worth noting that the startup implemented several rounds of layoffs in both 2022 and 2023.
With the aim of limiting its expenditure, the startup reduced its marketing cost by more than 50% to INR 235 Crores in FY23, down from INR 494 Crores in FY22.
Having abandoned its IPO plans in 2022, PharmEasy encountered a significant cash shortage last year. However, it recently successfully secured INR 3,500 Crores (approximately $424 million) through a rights issue.
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The startup announced its intention to use a portion of the proceeds from the rights issue to settle some of its outstanding debt.
Similar to the edtech startup BYJU’S, PharmEasy has been making efforts to repay the debt it acquired from Goldman Sachs. Previously, the startup violated its loan covenant terms with Goldman Sachs within a year of securing the high-cost debt.
According to the loan terms, the startup was obligated to secure an equity round of approximately INR 1,000 Crores ($120 million) but did not fulfill this requirement. The company had initially raised the debt to settle a prior obligation incurred for the acquisition of Thyrocare.
In the midst of these developments, PharmEasy appointed Yatharth Bhargova as the new Group CFO for its parent entity, API Holdings Private Limited, last year. With a capital raised of approximately $1 billion to date, PharmEasy competes with notable backers such as B Capital, Temasek, Eight Roads Ventures, Prosus, and Bessemer Venture Partners. The company competes with rivals like Tata 1mg, MediBuddy, and Practo in the online pharmacy market.
