How Pharmeasy Founders Changed the Face of Pharmacy Hardik Dedhia, Siddharth Shah, Dharmil Sheth, Harsh Parekh & Dr. Dhaval Shah; 34, Co-founders, API Holdings
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Dharmil Sheth, Dhaval Shah, Harsh Parekh, Siddharth Shah, and Hardik Dedhia, the five Pharmeasy founders were born, raised, and resided in the suburbs of Ghatkopar in Mumbai. Friends since childhood, their friendship would go back to kindergarten. Maybe that's the reason the five continued as co-founders even after running the business together for 10 years that too in times when in the world of startups the noise of founder friends becoming foes is a common gospel. Even today they stay in the same vicinity and have equal equity in the business.
Dhaval went on to do his MBBS while the four of them went to study engineering and did MBA. All of them showed early signs of leadership while studying and being involved in college student bodies. While they were all thinking about taking up a job and sitting for placements, Siddharth had one of his projects during the final year of his MBA to launch India's first online pharmacy. He was sure about not taking up a job and starting something of his own. His professor at the campus liked the idea and asked him to incorporate the company. While completing his second year of MBA at IIM Ahmedabad, he incorporated the company, which was named Dialhealth.com. His friend Hardik who was studying at Carnegie Mellon University happened to have a chat with him and got excited about the idea and returned to India to work with him on this project. A couple of months down the line, they convinced Harsh, who was one year senior and was working with Airtel to leave his job and join them. This was in 2012 and by 2013, Dharmil had also graduated. And in 2014 Dhaval too graduated.
Not just the starting years but making our mistakes early saw us in good light. The fact because we were self-funded for the initial years, we didn't have the luxury of making mistakes." Sidharth Shah
However, Dialhealth started by Harsh, Hardik, and Sidharth didn't work out as planned. Soon they thought about running a chain of retail stores, however, that also didn't become successful after which they started a distribution business by the name of Ascent Health. That business was running well in 2014, but they soon thought of re-launching the online pharmacy business. In the words of Sidharth, "When we launched it earlier, we had no idea about the supply chain. While for any successful online business supply chain is the most crucial aspect." At that time, Dharmil was running another business - 91streets and it was his idea to pivot both businesses and launch PharmEasy. In fact, the company is still registered as 91streets Media Tech Pvt Ltd. By that time Dhaval left McKinsey to join his friends to build the startup. From being the first, they were now the seventh online pharmacy company in 2015. And for the next three years, the five co-founders grew both the businesses - the online pharmacy as well the supply chain startup. By 2018-19, they thought it would make sense to put both businesses under one entity, and that is how API (Acronym for Ascent PharmEasy in India) Holdings was born.
I think the focus was the key."
The PharmEasy Pals
When asked about building a unicorn startup while staying together, Dharmil says, "The benefit of knowing each other has helped us a lot. More than knowing our strengths, it's our weakness that helps us in being transparent and honest. And that's how we have allocated our roles in the company." Though the growth hasn't only been an upward curve for the founders as almost three to four times the company has been on the verge of facing near death experiences. In 2013, when they wanted to start there was no one willing to back them. Their families had to mortgage their houses and everything they owned to fund the company. In one such incident, they had a term sheet from a partner but after all the due diligence, for reasons unknown, they backed out. Luckily, the company was doing well. That term sheet was signed at a valuation of INR 50 crores when they backed out. About INR 21 crores were invested by their families in the business. But in six months, they got another investor who funded them at a valuation of INR 150 crores.
If I could change one thing, I would say I would have wanted to fail faster."
At another moment in time one of the competitors in the market; using whatever resources they had actually filed an FIR on a fake pretext against them. And it literally came to a point where arrest warrants were issued against them. Their parents were threatened and stores were vandalized. Some of them had to go underground for a few days. As truth prevailed, the founders came out stronger together.
We were able to find people who were passionate about the business. It is not the success of one individual; it is about the five of us coming together."
Last year, was another emotional blow for the founders as they were prepared for an IPO. The roadshows were in full swing, and investors were positive about going public in March. And in February the Ukraine-Russia war happened. Two things happened, the founders and their team members invested instead of selling the shares. The founders and employees bought INR 45 crore worth of shares from the investors at that market price. And when the IPO did not happen, it affected the founders emotionally, especially to see their team members like that. However, it was a blessing in disguise, because it allowed them to focus on the business and build the business in a phenomenal way. And today the business is in better shape than ever before. In the words of Harsh, "We should be able to break even by April." Dharmil adds to it saying, "I think not just us, but the core team, which we have been able to build, they also have been extremely passionate about the business. The way we have been able to tackle and solve problems, I think it has been a phenomenal journey so far. Last year we decided we wanted to move to profitability, and not run after revenue anymore. We completely turned around the entire trajectory." The collective thinking on what's best for the organization made the co-founders stick together.
We started quite early at 23-24, which gave us room to fail and get back up. Our first couple of years were difficult but we stuck around and were determined to solve the issue.
Throughout these years the company has grown via organic and inorganic routes. After Medlife, they went on to acquire Thyrocare, which operates a chain of diagnostic and preventive care laboratories. Talking about the acquisition, Dharmil mentions, "I think diagnostics was always on our radar. Overall, what we have been trying to do in the consumer business is capture the OPT journey of a patient from doctor consultations, and diagnostics to medical supplies. We already had a very strong backbone in medicine supply. The next category was obviously diagnostics. In 2018, we started working on it but we were focusing only on Mumbai and Delhi on a small scale. 2019 was when we started scaling the diagnostics business and we also acquired a decent-sized diagnostic function with MedLife." And in 2021, the scale the category saw because of COVID was unimaginable and it completely changed the way diagnostics was working. The home-based sample collection as a use case started emerging. And that is when they realized that they needed the scale and the market presence to solve the backend problems, and that's when Thyrocare was chosen as the most preferred partner.
Today, across information of medical records and tele-diagnostics and consultation and medicine they have become the largest player in the country. As per Harsh, "We always wanted to build a profitable, sustainable business." The company plans to reach profitability by October 2023, which was earlier planned in three years while the company was planning to go public. Siddharth signs off saying, "We will be EBITDA profitable in 7 to 8 months from now, before October 2023. We are likely to cross net revenue of INR 7000 crores by that time."
- 5 Co-founders
- 25000 teleconsultations a day
- 1.5 medical records stored on the platform
- 3.3 crore registered users of Pharmeasy
- 150000 retailer customers of PharmEasy
- 11 crore Diagnostic tests are done in a year
- 20,000 employees
- 600 franchise stores
2013: Launched the company
2018: Raised Series C Funding
2019: Started Diagnostics business
2021: joined the Unicorn club and Acquired Thyrocare
2022: planned to go public
2023: Targeting profitability