Apollo Pharmacy demerger: More than what meets the eye

In demerging its pharmacy business, Apollo Hospitals is splitting the ownership multiple ways. As baffling as it is, the endgame is not very hard to guess. It’s also one that could benefit one shareholding group more than the others

India’s largest hospital chain, Apollo Hospitals, is demerging its pharmacy business. But it’s a deal that makes it look more like a parking exercise than a clean demerger

By adding more layers to ownership, in an already complex corporate structure, the group will perhaps hurt the pharmacy vision and minority shareholders

Because if the buyback, as stated by AHEL, happens, the front-end pharmacy will not have much to show for

The group might end up combining the back-end distribution and the front-end retail. And there’ll be one shareholding group left on the sideline

Corporate structures are often a giveaway. Of strategy, culture, growth, and increasingly, of intent. Last week, shareholders of Apollo Hospitals Enterprise Limited (AHEL), India’s largest hospital chain, approved a major corporate restructuring. AHEL will de-merge its pharmacy business, Apollo Pharmacy Limited (APL), a country-wide chain of 3,428 pharmacies, effective April 2020. Antitrust regulator Competition Commission of India already gave the go-ahead for the move in September this year.

The demerger will see three financial investors—Enam Securities, Hemendra Kothari and Jhelum Investments—put Rs 527.8 crore ($74.6 million) on the table for 74.5% of Apollo Pharmacy.

AUTHOR

Seema Singh

Seema has over two decades of experience in journalism. Before starting The Ken, Seema wrote “Myth Breaker: Kiran Mazumdar-Shaw and the Story of Indian Biotech”, published by HarperCollins in May 2016. Prior to that, she was a senior editor and bureau chief for Bangalore with Forbes India, and before that she wrote for Mint. Seema has written for numerous international publications like IEEE-Spectrum, New Scientist, Cell and Newsweek. Seema is a Knight Science Journalism Fellow from the Massachusetts Institute of Technology and a MacArthur Foundation Research Grantee.

View Full Profile

Others tell you what. We tell you the ‘So What?’

Read articles that decode the most significant shifts happening around business, technology, startups and healthcare. 1000+ articles for subscribers of the India edition. 150+ articles for subscribers of the Southeast Asia edition. Plus premium newsletters that help you make sense of the world around you.

So much journalism in India is superficial.

Articles are generic, almost cookie-cutter in their approach. And they don’t provide enough context on the issues they cover. The Ken is different. I don’t always agree with everything they say but I appreciate their commitment to publishing deeply reported narratives and investigations. Their reporters find new ways to analyze tech among other industries. And that’s always worth a read.

Sid Talwar / Co-Founder and Partner / Lightbox Venture Capital

As entrepreneurs, we thrive on being in the know at all times.

A personal subscription to The Ken was a no brainer. But as startup founders, this isn't enough. Team members also need to be in the know, for everyone handles customer-facing responsibilities and an ecosystem change that impacts customers also impacts us

Kiran Jonnalagadda / Co-founder / HasGeek and Internet Freedom Foundation