A landmark deal: The $600m buyout by a Temasek-backed Indian e-pharmacy unicorn

PharmEasy, a five-year-old startup based in India, has become the talk of the town after announcing that it’s shelling out about US$613 million to acquire a 66.1% stake in Thyrocare Technologies, one of the country’s largest diagnostics laboratory chains.

But the bigger deal is how this is the first-ever acquisition of a publicly listed firm by a unicorn startup in India.

PharmEasy team / Photo credit: PharmEasy

While PharmEasy, which allows users to order medicines and healthcare products online and book diagnostic tests, contemplated scaling up its in-house solution organically, it chose to go ahead with the acquisition of the 25-year-old diagnostic lab firm instead.

“The only one piece we were not very strong on was diagnostics,” says PharmEasy co-founder Siddharth Shah, candidly explaining the move to Tech in Asia.

He said that prior to the deal, the company did experiment with its own diagnostic solution and ran pilots in select cities, mostly in urban areas.

Shah added making diagnostic services available under one roof improved customer retention, encouraging the company to consider taking the feature to a pan-India level.

However, there’s more to this acquisition deal than just adding to PharmEasy’s capabilities as a healthtech startup.

Higher dose of data

It’s been over a year since Covid-19 struck, and India is among the world’s worst-hit countries. The recent second wave of the pandemic saw the daily cases cross over the 400,000 mark at one point. The surge led to a huge demand for Covid-19 tests from private diagnostic labs like Thyrocare, especially from April to May.

Lab technicians at a Thyrocare diagnostic facility / Photo credit: Thyrocare

As India braces itself for newer waves of the pandemic, the number of people opting for private diagnostic labs is likely to keep increasing. The country’s testing infrastructure and public labs are generally overburdened, and those with higher incomes often turn to private labs as they offer customized services such as home service Covid-19 tests, which involves lab technicians going to a person’s house to administer a swab exam.

And then there’s valuable data about patients’ conditions and their medical requirements that a lab chain like Thyrocare can give PharmEasy. While it is looking to leverage such data, PharmEasy will ensure that its methods won’t inconvenience customers, according to Shah.

For PharmEasy, one thing is clear: “Data that helps the patient is something that is worth tapping into. And data that does not help the patient is not worth tapping into,” he stresses.

Going public

A US$4 billion boost in valuation

Competitors’ moves