Pharma distributors tighten the screws on e-pharmacies after PharmEasy debacle

Sowmya Ramasubramanian

3 reads

Aparajita Saxena

4 reads

Sowmya Ramasubramanian

3 reads

Aparajita Saxena

4 reads

With PharmEasy set for a massive drop in valuation, pharma distributors are a wary lot. Having shared an uneasy relationship with e-pharmacies for the last five years, they’re changing the terms of their agreements with e-pharmacies to protect themselves from any further implosions in the space.

August 01, 2023

7 MINS READ

Key Takeaways

With PharmEasy’s valuation set to plummet from its pandemic high of $5.5 billion, pharma distributors are reconsidering their already uneasy equation with e-pharmacies
Some are reworking agreements with e-pharmacy clients, shortening credit periods and blacklisting those that ask for payment deadline extensions
E-pharmacies, many of which set up their own supply chains to rival traditional distributors, are realising that this is not the relationship of equals
This could make things harder for e-pharmacies, which are already struggling to chart a path to profitability

Being India's biggest e-pharmacy hasn’t been enough to keep the wolf from PharmEasy’s door.

Mired in losses—PharmEasy’s parent company recorded a loss of Rs 3,992 crore in the year ended March 2022—and burdened with debt, the company is currently attempting to orchestrate a life-saving rights issue to raise capital. This, however, would likely still see the valuation of Mumbai-headquartered PharmEasy drop from $5.5 billion during its last fundraise in 2021 to just north of $700 million, according to reports.

PharmEasy’s unravelling has cast a pall over the wider e-pharmacy space, with investors and industry experts wondering if this is just the start of a wider reckoning in the sector. Tata 1mg, PharmEasy’s biggest rival, also reported a loss of Rs 526 crore in the year ended March 2022.

Stakeholders in the pharma ecosystem are looking on with concern. Pharma distributors, spooked by the PharmEasy debacle, are reconsidering their already uneasy equation with e–pharmacies.