Indian online pharmacy startup PharmEasy has experienced a significant decline in its valuation, according to estimates by its investor Janus Henderson. The startup, which was once valued at $5.6 billion, is now estimated to be worth around $458 million, representing a 92% decrease from its peak valuation.
This news comes as a surprise considering that just a few months ago, PharmEasy announced a rights issue to raise $417 million. The rights issue allows existing investors to purchase new shares in the company at a lower valuation. The fact that the rights issue was oversubscribed suggests that there was confidence in the startup’s potential.
However, it appears that some investors had already started to cut the value of their holdings in PharmEasy last year. The new valuation estimation indicates that the startup is now worth less than the amount it paid to acquire diagnostic lab chain Thyrocare in 2021.
PharmEasy, which has raised approximately $1 billion to date, offers a range of services including wellness tools, consultations, diagnostic and radiology tests, and treatment deliveries. The startup had initially filed for an $843 million IPO in November 2021 but later postponed the plan. Instead, it turned to debt financing, borrowing $300 million from Goldman Sachs. However, the loan ultimately proved costly for PharmEasy as it struggled to repay the capital and raise new funds with equity.
Despite these challenges, PharmEasy’s co-founder Dharmil Sheth remains optimistic and focused on the team’s achievements. In a LinkedIn post, he emphasized the hard work and dedication of the people behind the company, highlighting that they are more than just entities on paper.
PharmEasy is not the only startup experiencing a decrease in valuation. Many investors globally are marking down the worth of their startup holdings. For instance, 360 One, an investor in Indian news aggregator startup Dailyhunt, recently valued the firm at $2.9 billion, down from its previous valuation of $5 billion.
This decline in valuations highlights the challenging environment that startups are currently facing. It serves as a reminder that even successful startups can experience setbacks and fluctuations in their value. Nevertheless, it’s important to recognize the efforts of the teams behind these startups and their determination to overcome obstacles and achieve success.
Overall, the declining valuation of PharmEasy underscores the unpredictable nature of the startup ecosystem. It serves as a reminder that valuation is not a static number and can fluctuate based on various factors. Despite the current challenges, it will be interesting to see how PharmEasy adapts and navigates the market to regain its growth trajectory.