Exclusive: PharmEasy changes internal legal structure, consolidates units for better valuation

PharmEasy, India’s largest online pharmacy has changed its legal structure, merging units into a single entity and parent ahead of its merger with rival Medlife, a move that sources say will help  attract a better valuation.

Previously, PharmEasy’s online marketplace business was earlier owned by 91Streets Media Technologies Pvt Ltd, while its inventory and stocks were owned by Thea Technologies Pvt Ltd. These two are now being merged into new legal entity- Threpsi Technologies Pvt Ltd, said sources familiar with the matter. 

PharmEasy (Threpsi) is in turn owned by API Holdings, the ultimate parent company. PharmEasy is also acquiring Medlife, in a $230 million deal which gives Medlife shares in API Holdings, according to filings with fair-trade regulator Competition Commission of India (CCI)

The change in legal structure means that API will also own Ascent Health and Wellness Solutions Pvt.Ltd - a separate pharma supply chain and credit platform, which also acts as a business-to-business (B2B) distribution entity for PharmEasy.

This means all investors of Ascent Health as well as PharmEasy will now be allocated shares in API Holdings, which was not the case earlier. Ascent is backed by private equity firm Everstone Capital, while PharmEasy has raised about $300 million in capital so far, from investors such as Singapore’s sovereign fund Temasek and Canadian pension fund CDPQ, among others. 

“One big differentiator for PharmEasy from other players is the Ascent backing and their B2B supply strength. Consolidating the legal units will help them sell the story to investors better,” said a source involved in negotiations, requesting anonymity as the matter is private.

Post the acquiring Medlife, PharmEasy will be valued at $1.2 billion, making it India’s first unicorn- privately held startups valued at over a billion dollars- in the health-tech space.

PharmEasy declined to comment on Moneycontrol’s queries regarding the changes.

PharmEasy also plans to raise more money from new and existing investors once the merger is completed, and for a better valuation in that fundraise, it has changed the legal structure.

However, for investors of PharmEasy this means that they are getting stakes in a full-fledged pharma distribution business, not just an online pharmacy marketplace (the way most online retailers tend to operate), while for investors of Ascent, it gives them stakes in an internet and e-commerce business, and not just the distribution business they originally invested in.