“There is no path to profitability for the big-discounting online pharma guys,” quips Madhukar Gangadi, promoter and CEO of MedPlus. Gangadi’s dismissiveness of his rivals is meant to project strength. MedPlus is, after all, India’s second largest pharmacy chain—both in terms of operating revenue and number of stores.
Despite its size and standing, however, MedPlus has seen little love from private investors. This, even as investors have thrown money hand over fist at his digital-first rivals. API Holdings, the holding company of e-pharmacy major PharmEasy, has raised $650 million since April. It is currently valued at $4 billion.
In contrast, MedPlus’s last fundraise—from PremjiInvest and private equity giant Warburg Pincus in February—valued the company at $400 million. Indeed, The Ken has learnt that this fundraise was only necessary because MedPlus failed to get acquired.
In 2019, Gangadi had approached PharmEasy with a sale offer for Rs 3,000 crore (~$400 million)—roughly the same valuation he eventually managed from existing investors PremjiInvest and Warburg Pincus. However, talks fell through as the two companies could not agree on the price.
After eventually securing funding, MedPlus is now looking to go public in its quest to raise the funding it needs to stay competitive in India’s crowded pharmacy sector. Last month, it filed its draft red herring prospectus (DRHP) for a Rs 1,600 crore ($217 million) initial public offer (IPO), making it the first pharmacy chain to do so. The company is hoping that, unlike private equity and venture capital, which chase loss-making, high-growth businesses, MedPlus’ more conservative approach will find backers in the public markets.
MedPlus’ road to redemption, however, is anything but straightforward. For one, success on the bourses is no longer the sole bastion of the profitable, as Zomato’s blockbuster IPO proved. And while it may be the first, it’s hardly the only pharmacy chain looking to go public.
Over the next year, the public markets will likely have their pick of pharmacy chains and business models to choose from. Starting with API Holdings, which is expected to file its DRHP next month. Unlike MedPlus, which is still largely a brick-and-mortar business with a small but growing online channel, PharmEasy is a largely online juggernaut with serious capital to burn through aggressive advertising and discounting. The likes of Poonawalla-backed Wellness Forever Wellness Forever Mint Poonawalla-backed Wellness Forever plans $160-mn listing Read more could soon join the IPO sweepstakes as well.
