Exclusive: PharmEasy FY20 revenue nearly doubles to Rs 637 crore

PharmEasy, India’s largest online pharmacy, has nearly doubled its revenue in FY20 to Rs 637 crore although its losses also increased during the same period, according to documents viewed by Moneycontrol.

PharmEasy’s trading entity, run by Thea Technologies Pvt. Ltd, earned Rs 637 crore in FY20 - compared to Rs 340 crore in FY19, according to its unaudited financial statements. Its losses before tax for the period also doubled to Rs 100.7 crore from Rs 50 crore a year earlier.

The FY20 numbers, ending March 31, only factor in a small portion of the coronavirus lockdown while the last six months have been a busy time for the industry amid fundraises, acquisitions and orders going through the roof.

Compared to other online pharmacies, at least on paper, PharmEasy has been able to keep its cash burn and losses in check. A loss of Rs 100 crore on revenue of Rs 640 crore of revenue is better compared to rivals Medlife (which PharmEasy is acquiring) and Sequoia Capital-backed 1mg. For FY19. Medlife’s revenue grew 165% to Rs 363 crore, on a loss of Rs 404 crore, while 1mg more than doubled to Rs 240 crore in FY19, while losses also almost doubled to Rs 170 crore.

But, PharmEasy’s losses also seem lower because among other reasons, it counts its marketing cost- a large expense in this business- as part of its parent API Holdings’ statements.

API Holdings also owns and runs Ascent Wellness and Pharma Solutions - a pharma supply chain business.

The burn and losses are potentially much higher because marketing costs are not shown in these numbers.

In the statements viewed by Moneycontrol, marketing costs for Thea - which runs PharmEasy - is zero.

Although these are unaudited numbers, they are likely final, and the variance between audited and unaudited numbers is generally not more than 2-3 percent.

PharmEasy declined to comment on the figures and other queries from Moneycontrol.

These are also numbers before PharmEasy set out to acquire rival Medlife in a $230 million deal, as Moneycontrol first reported on July 20. After the acquisition, both PharmEasy and Medlife will hold shares in API Holdings, and the online pharmacy will be valued at $1.2 billion. 

For FY19, Medlife’s revenue grew 165 percent to Rs 363 crore but its losses also climbed to Rs 404 crore, according to media reports.

Founded by Dhaval Shah and Dharmil Sheth in 2015, PharmEasy last raised $220 million in a funding round late in 2019, led by Singapore’s sovereign fund Temasek and canadian pension fund CDPQ, among others, and was valued at $700 million at the time. It has raised about $300 million in capital so far.

Its revenue growth also comes at a time when business for online pharmacies has exploded during the coronavirus pandemic, as more people order medicines and ancillary services from home. This has also triggered already-pending consolidation in the space. While PharmEasy is acquiring Medlife, Reliance Industries Limited, India’s largest conglomerate acquired Netmeds, another online pharmacy, valuing it at Rs 1000 crore last month.

1mg, another online pharmacy is in talks to close a $100 million round led by homegrown private equity fund Gaja Capital, the Times of India reported on September 7.

Online pharmacies are looking to capitalise on medicine ordering for chronic illnesses such as diabetes, which has repeat value, and also become a healthcare platform, by offering services such as diagnostic tests, and in some cases, even doctor consultations. Offering tests contributes to 10-15% of revenue for most of these firms, but the unit economics are better than the core medicine delivery business, where margins are very low.

“PharmEasy has access to capital more than other players in the space because they grew revenues fast, but the true test of the business will be if it can generate profits in the next few years and reinvest it in growth. But having a pharma distribution supply chain does help them integrate the product better,” said an executive at an e-pharmacy, requesting anonymity.