Indian online pharmacy startup PharmEasy, once riding high on a $5.6 billion valuation, has seen its market worth take a dramatic nosedive, according to recent estimates by its investor Janus Henderson. The company, which offers a suite of health and wellness services, is now valued at just $458 million, marking a 92% decline from its peak.
The revelation comes from a securities filing by the British-American global asset firm, which detailed its valuation of its shares in the Indian startup. This valuation starkly contrasts with the company’s own announcement in April that it had launched a rights issue to raise approximately $417 million. The rights issue, which enables existing investors to purchase new shares at a reduced valuation, was reportedly oversubscribed, indicating some level of confidence among investors.
However, the optimism appears to have been short-lived. Regulatory filings from the same period revealed that PharmEasy had secured only about $216 million from the rights issue. Moreover, some investors had already begun to reduce the value of their holdings in the company last year.
Despite its impressive list of backers, including Temasek, TPG, B Capital, and Prosus, PharmEasy did not respond to requests for comment on the latest valuation. Similarly, Janus Henderson declined to comment on the matter.
PharmEasy, which has raised about $1 billion in funding to date, provides a range of services that include wellness tools, health consultations, diagnostic and radiology tests, and medication delivery. The startup had once been a beacon of success in the Indian tech scene, but its current financial困境 raises questions about its future.
The company’s troubles began to surface in November 2021 when it filed for an $843 million initial public offering (IPO) but later deferred the plan. Instead, it turned to debt to fund its rapid growth. A $300 million loan from Goldman Sachs became a significant burden as the company struggled to repay the capital and raise new funds through equity in a market that had turned bearish.
In a LinkedIn post, PharmEasy co-founder Dharmil Sheth expressed a resilient stance, writing, A lot has been written and a lot said about us. We generally don’t respond and believe in just doing what is right for the team, the shareholders, and the company and just out-execute. It’s easier to write about companies as they are ‘entities at the end’. We tend to forget that at the end these entities are made by real people with real sweat, blood, tears, and a lot more! Cheers to what the team did in the last one year > achieved the seemingly impossible.
The decline in PharmEasy’s valuation is part of a broader trend where investors are marking down the worth of their startup holdings globally. For instance, 360 One, an investor in the Indian news aggregator startup Dailyhunt, recently wrote in a note to its limited partners that it values the Indian firm at $2.9 billion, down from about $5 billion earlier.
The challenges faced by PharmEasy reflect the volatile nature of the startup ecosystem, where valuations can swing wildly based on market conditions and investor sentiment. The company’s journey from a $5.6 billion valuation to a mere fraction of that amount serves as a stark reminder of the risks and uncertainties inherent in the world of tech startups.
As the Indian startup scene continues to evolve, PharmEasy’s ability to navigate these turbulent times will be closely watched. The company’s future will depend on its ability to adapt, innovate, and regain the trust of investors and customers alike. Whether it can reclaim its former glory remains to be seen, but the current valuation certainly paints a challenging picture for the once-promising startup.
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