Prosus Ventures (previously Naspers Ventures) is the venture investing arm of South African technology and media conglomerate Prosus, which is one of the largest investors in Indian technology startups including Swiggy, Byju’s and Meesho.
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The Economic Times was the first to report about Pharmeasy’s funding round being led by Naspers on October 15 last year.
The deal is estimated to have valued Pharmeasy at $1.5 billion post-investment, said people in the know, making API Holdings the latest entrant into India’s unicorn club—privately held startups valued at or over $1 billion. API Holdings joins the likes of
Five Star Finance, which all entered the unicorn club this year, at a time when risk investors are flocking to India to back companies at the forefront of the digital economy.
API Holdings did not confirm its valuation post the funding round.
The round also saw participation of existing investors Temasek, CDPQ, LGT Lightrock, Eight Roads and Think Investments, and will be a mix of primary and secondary capital.
API Holdings said while $323 million in funding had already been received, further investment of $27 million would be closed soon. A person in the know of the development said two-thirds of the capital would be primary funding while the rest would be secondary investment.
The company said it would utilise the fresh funds to expand the base of pharmacies it works with from 80,000 today to 120,000 within the next 12 months. It will enhance it subsequently to 200,000 in the next two years, helping it expand beyond the 100 cities it is present in today.
“We will continue to invest significantly on the supply chain,” said Siddharth Shah, cofounder and chief executive at API Holdings. “It took us eight years to reach 80,000 pharmacies and in the next two years we want to get to 120,000 more pharmacies.”
He added that the company’s model was to digitise existing pharmacies by connecting them to an efficient supply chain.
API Holdings said its business-to-business pharma operations were recording gross merchandise values (GMV) of around Rs 600 crore per month, while its front-end online pharmacy was driving an additional Rs 240 crore to retailers on its platform.
The investment comes after API Holdings
acquired smaller rival Medlife in exchange for a 19.59% stake in the company last year, in a deal that was estimated to be valued at $240 million. The family office of Prabhat Narain Singh, one of the founders of drug maker Alkem Laboratories Ltd., which was the largest shareholder in Medlife, has a board seat in API Holdings.
The capital infusion into API Holdings also comes at a time when giants such as
Industries Ltd., which has
acquired a majority stake in Chennai-based Netmeds, Tata Group that is in the final stages of
acquiring a majority stake in online pharmacy 1MG, and Amazon have entered the online pharmacy sector.
Further competition is brewing with India’s largest pharmacy chain Apollo Pharmacy entering online retail, and also the coming together of pharmaceutical majors such as Sun Pharma, Lupin, Alkem, Torrent Pharma and others to start their own B2B pharma distribution business with
their acquisition of Pharmarack.
Shah said he didn’t see growing competition in the sector as a bad thing, as there was a lot of headroom for everyone to grow. “The way we look at it is we are very small today. We’re touching about 10% of India’s (pharma) retailers and we’re barely touching 15-18 lakh customers a month. In terms of our GMV (gross merchandise value), we’re just about 3-3.5% of India’s market,” he added.
Ashutosh Sharma, head of India investments at Prosus Ventures, said the investment in API Holdings was intended to tap into the large market for healthcare in India. He said India was still in its early stages of tech adoption in healthcare.
“It’s a very large market and does not just impact the top 10 million or 15 million consumers in India. It’s an all-pervasive product, all 1.3 billion people in India use healthcare in some way,” Sharma said. “The underlying core of the platform (that API Holdings has built) is strong tech capabilities, and that excites us.”
Apart from running a pharma distribution and online marketplace, API Holdings said it was investing in building a telemedicine business that today sees nearly 500,000 online consultations a month. It is also building products to digitise doctors and is looking to work with hospitals as well.