Healthtech startup PharmEasy had high hopes when it filed for an initial public offering (IPO) of up to INR 6,250 crore (US$781 million) back in November 2021. And if wishes were horses, it would have put its unicorn status to good use. 

But on 20 August—within six months of getting a nod from the Securities and Exchange Board of India (Sebi)—the company decided to take a U-turn by withdrawing the Draft Red Herring Prospectus (DHRP).

PharmEasy, valued at $5.4 billion in its pre-IPO round, cited “market conditions and strategic considerations” as the reason behind the move. Now, the company’s plans to go public will take a backseat for at least a year, according to industry experts closely watching the space.

Also on hold in the near future will be any acquisitions by PharmEasy. That’s a huge deal for a company that owes its valuation partly to its ability to gobble up its peers through acquisitions, such as diagnostics chain Thyrocare, software solutions company Marg, and medical supply chain company Aknamed.

But with the acquisitions that were already finalised came 24 loans with interest rates ranging from 9% to 12.5%. PharmEasy’s largest purchase purchase Mint Pharmeasy buys stake in Thyrocare Read more was that of Thyrocare in June 2021. To partially fund this, it picked up debt from multiple entities, including Kotak Mahindra Bank. 

The company paid paid The Ken The PharmEasy-Thyrocare jinx on the Metropolis-Hitech deal Read more over 40X Thyrocare’s operating profit for the acquisition, which industry watchers and analysts said was expensive. 

Tumbling down

Thyrocare’s stock value has decreased from Rs 1,283 ($16) to Rs 632 ($8) per share since the acquisition. In the same period, the share price of its rival Dr Lal Path Labs also saw the stock price drop to Rs 2,585 ($32) from Rs 3,861 ($48).

PharmEasy had planned to earmark Rs 1,929 crore (US$241 million) from the net proceeds of the fresh issue to pay off the loans. But the listing never came to pass and the deadline for repaying nearly Rs 2,000 crore (US$250 million)—in August—was approaching. The company was in a bind. 

Enter Plan B: repay the previous loans by taking a new loan. 

On 26 June, the American investment bank Goldman Sachs, through its Indian arm, gave PharmEasy a loan of Rs 2,280 crore (US$285 million) at an interest rate of 3%.