4540 cr deal: PharmEasy to obtain 66% stake in Thyrocare

On 25 June, online medicine delivery start-up PharmEasy declared it would acquire a 66.1% stake in diagnostic chain Thyrocare Technologies Ltd. PharmEasy’s parent company, API Holdings Ltd., confirmed the “signing of definitive documents” for a deal worth Rs. 4,546 crores in an official statement on Friday.

DocOn Technologies Pvt. Ltd., a subsidiary of PharmEasy’s parent API, will acquire the stakes from Thyrocare’s chairman and MD, Dr A Velumani, and affiliates at Rs. 1,300 per share. This acquisition will also lead DocOn to make an open offer of an additional 26% stake in an attempt to strengthen and diversify its business. Kotak Investment Banking and JM Financial were advisors of PharmEasy on the deal and open offer.

This exchange filing is dependent on several regulatory and similar customary approvals.

Impact on PharmEasy and Thyrocare

Lockdowns and social distancing norms in a post-pandemic era have changed the way individuals access necessities, including medicines. The increasing feasibility of online services in India have led to customers booking tests and buying medicines over the internet. The fear of getting infected has also led more people to prefer online pharmacies over visiting drug stores.

PharmEasy boasts a customer base of 12 million, 90,000 partner retailers, and 6,000 digital consultation clinics across India. It owns two units, DocOn and Retailio. Partnering with India’s largest medicine delivery platform will help Thyrocare reach more customers. This transaction is especially remarkable, coming right after PharmEasy’s acquisition of Medlife.

Similarly, Thyrocare is India’s largest B2B entity in the diagnostics arena, with a network of 3,330 collection centres. It is also the country’s leading diagnostics solution provider volume-wise, performing 110 million+ tests annually. Thyrocare shares saw a rise of 6.2% in worth, resulting in Rs. 1,448.05 per share at closing on Friday.

Diagnostics constitute 5% of PharmEasy’s annual sales. Getting Thyrocare’s stakes on its portfolio is a huge step-up for the online platform and will help scale its business.

According to the exchange filing, A Velumani will also be acquiring a non-controlling stake of less than 5% in API Holdings. This will constitute an investment of approximately Rs. 1,500 crores.

How is this partnership going to benefit customers?

PharmEasy claims to be adequately funded to acquire the said stake in Thyrocare. Currently, it is backed by investors like CDPQ, LGT Lightrock, and Temasek. According to the company, the primary goal of this deal is to “create a one-stop-shop for end-to-end healthcare solutions”.

Dr. Velumani mentioned while commenting on the transaction Thyrocare’s reach and expertise in diagnostics combined with PharmEasy’s dynamic and young team will massively help the layperson access healthcare solutions more easily.

The CEO of API Holdings, Siddharth Shah, reaffirmed this sentiment with his comment on the deal’s acquisition. He expressed PharmEasy’s intent to provide world-class solutions by leveraging technology and Thyrocare’s nationwide presence.

Parting words

The e-pharmacy sector has seen several mergers and acquisitions in the past year. According to the online medical delivery platform, the latest PharmEasy-Thyrocare deal will allow both companies to collaborate and deliver top-notch outpatient and diagnostic services.  Owing to the surge in demand for medical care requirements, pharmaceutical firms are expected to grow exponentially in the recent future with such synergies.