Pharmeasy acquires Thyrocare in Rs 4,546 crore-deal

Online pharmacy and delivery platform Pharmeasy has acquired Thyrocare Technologies in a deal worth over Rs 6,300 crore. While the stake purchase from Thyrocare's founder A Velumani is valued at Rs 4,546 crore, Pharmeasy will acquire an additional 26 per cent through an open offer at a valuation of Rs 1,788 crore.

Mumbai: Startup Pharmeasy on Friday announced acquiring established diagnostics chain Thyrocare Technologies in a deal worth over Rs 6,300 crore, including buying the controlling stake from its 62-year-old founder A Velumani. Pharmeasy's parent company API Holdings has signed a definitive agreement to buy 66.1 per cent of Thyrocare stocks from Velumani and his affiliates at Rs 1,300 per share at the latter's residence in the hill town of Lonavala in Pune, according to a statement.

While this stake purchase is valued at Rs 4,546 crore, API will acquire an additional 26 per cent in the listed Thyrocare through an open offer at a valuation of Rs 1,788 crore. Acknowledging that it is an "audacious move" wherein his 7-year-old company is acquiring the 25-year-old Thyrocare, API Holdings' Chief Executive Siddharth Shah said the deal will synergise the offerings of Pharmeasy with Thyrocare's services to ensure that 70 per cent of India gets a blood report and medicines in their homes within 24 hours.

Pharmeasy is primarily into medicine deliveries. At present, Thyrocare has a network of 4,000 partner labs while Pharmeasy serves 1.7 crore customers monthly through its network of 6,000 digital consultation clinics and 90,000 partner retailers. "We feel diagnostics is very important, Thyrocare has an outstanding backend, a very low cost structure and we have an unbelievable front end," Shah told PTI from Lonavala after signing the agreement. Pharmeasy will be raising USD 500 million at a valuation of USD 400 crore to fund the acquisition, Shah said, adding that it is already in touch with several institutional investors, including existing backers for the money.

Pharmeasy had last raised money in April this year, when it sealed a USD 32.3 crore-round at a valuation of USD 150 crore. Shah said the long term plan for the company is to go public but desisted from mentioning the timelines which are being chased. Mentioning about its buyout of Medlife last year and that of Thyrocare acquisition now, Shah said plans are evolving for the company. According to Shah, the plan for now is to ensure that the entire length and breadth of the country is served by Pharmeasy.

There is a need for having a holistic approach to healthcare using the best of technological inputs, where a customer journey starts with discovering a health anomaly and ends with the right diagnosis and subsequent care, he added. Shah said a provision has been made for Velumani -- who gets richer by USD 60 crore after the deal -- to invest for up to 5 per cent stake in API in its USD 50 crore capital raising round, after the sale is over. He stressed that the investment from Velumani will be separate from the existing deal. "I am excited about this relationship, unique of its kind in Indian healthcare industry.

The unique reach and strength of Thyrocare in diagnostics blended with the young and dynamic team of Pharmeasy will bring in better healthcare solutions for common man nationwide," Velumani, the Chairman and Managing Director of Thyrocare, said. When asked about Velumani exiting Thyrocare, Shah said, "Every father believes that the child must be passed on to the next generation in a manner that the child grows and prospers and I think that is what he thinks will happen with us".

Deal activities in the healthcare sector have been hotting up in recent weeks, with Tatas announcing a majority stake buy in 1mg, and Reliance Industries paying Rs 620 crore to acquire a majority stake in Netmeds. E-tailer Amazon has also started retailing pharma products recently. "We are not in battle with the likes of Tatas and Reliance. They are all very big people. We want to keep our head down and continue to focus on our work," Shah said. API's investors include Prosus Ventures (formerly Naspers Ventures), TPG Growth, Temasek, CDPQ, LGT Lightrock, Eight Roads and Think Investments.

Without disclosing who made the first approach for the deal, Shah said the entire deal was sealed within 15 days. API was advised by J M Financial and Kotak Mahindra Capital Company. "This deal brings together India's leading digital health platform and one of the most cost-efficient diagnostics solution providers to create an unbeatable integrated digital health platform," J M Financial's Managing Director Vishal Kampani said. Shares of Thyrocare closed 6.23 per cent up at Rs 1,448.05 apiece on the BSE.

PTI