It’s been a little over a month since the healthcare space was shaken up by a deal that did not walk the conventional path. Not every day does a unicorn buy a listed company.

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The ₹4,546 crore deal brought together companies that owned popular brands PharmEasy and Thyrocare, with API Holdings, the parent of the former, picking up 66.1 per cent stake in Thyrocare Technologies from its founder Dr A Velumani.

Announced on a “monsoon drenched” evening in Mumbai, the alliance drew attention at many levels. There was 32-year-old Siddharth Shah sitting at the table with 62-year-old Velumani, representing digital and traditional economies as well as different generations. For Siddharth, co-founder and Chief Executive of API Holdings, the moment was also a vindication of his choice, after finishing his studies at IIM Ahmedabad, to take the entrepreneurial path, rather than land a plum corporate job.

Going back to where it started in 2011-12, Siddharth recalls his project “DialHealth”, when his professor, Anil Gupta, gave him the nudge down the entrepreneurial road. In this early avatar of an online pharmacy, Siddharth was joined by “close friends” Hardik Dedhia and Harsh Parekh. Dharmil Sheth who, Siddharth says, he knew from junior kindergarten, and Dhaval Shah, his “adjacent roll-number in Class 11 and 12”, were also onboarded.

“We all came from the same zip code, middle-class Gujarati families (Jains) from Ghatkopar (Mumbai),” he says, adding that they were products of their ecosystem. Trained as engineers or doctors (Dhaval is a medical doctor) and armed with business management skills, they harboured entrepreneurial dreams. It came good with PharmEasy, created in 2015.

“Lots of mistakes”

“Ambition was always there, and there were lots of mistakes,” says Siddharth candidly. “We have come this far as a result of failure. And there’s no shame in accepting that,” he says.

The different businesses under API Holdings, he says, were added one by one, when they ran into hurdles or requirements in the supply chain as they tried to create a seamless outpatient solutions. Some aimed to ensure the physical supply of medicines, or improving connectivity with doctors. API Holdings, as a result, ended up creating businesses such as PharmEasy, RetailIO and DocOn [see box].

Through the failures, his parents who provided the initial seed capital, encouraged him. And there was early support from the co-founders’ parents as well, he says: “No one dissuaded us”.

The co-founders have their tasks cut out, Sheth takes care of the consumer connect, Dhaval looks at growth strategies, Dedhia handles supply chain issues and Parekh handles technology, says Siddharth.

The co-founders are busy ironing out legal requirements as the road ahead involves a possible listing of API, decisions on Thyrocare’s listed entity, integration issues and so on. High up on the agenda is the open offer that DocOn Technologies (API’s wholly-owned subsidiary), will have to make for the additional 26 per cent stake in Thyrocare. Separately, Dr Velumani will acquire a minority stake of less than 5 per cent in API.

Thyrocare’s revenues stand at ₹474 crore (FY 20-21) and PharmEasy’s revenues were at ₹637 crore (FY 20), according to reports. Siddharth does not discuss the numbers, citing disclosure norms. The combined entity canprovide diagnostics and pharmacy services to 100 million in the country in 24 hours, say the co-founders.

The new API network
  • API’s brands: PharmEasy (online pharmacy and diagnostics brand), RetailIO (a B2B pharma marketplace and seller), DocOn (a consultation and EMR platform)
  • API, across its multiple brands, has 12 million consumers, 6,000-plus digital consultation clinics and 90,000+ partner retailers across India
  • Thyrocare has performed over 110 million tests annually and has a network of 3,330+ collection centres across 2,000+ towns in India
  • Thyrocare operates a multi-lab model with one mega central processing lab, two zonal processing labs and 13 regional processing labs across the country

Serendipity or planned?

In his recent podcast with Business Line , asked if everything worked to a plan, or was it a serendipitous ‘fortune favours the brave’ thing, Siddharth said, it was a combination of both. “An act of bravery without a plan won’t go very well. People make plans, but may not have the courage to go through with it,” he points out.

The young brigade has learnt a lot from industry veterans such as Aditya Puri, former HDFCBank Managing Director, and Dr Velumani. Siddharth says Puri is one of the most “insane mentors that I could have ever asked for” and Dr Velumani, he describes as a “scientist at heart” who built a precision and quality company.

The unicorn API has multiple private investors on board, including Bessemer Venture Partners and TPG Growth and is talking to more. There is hunger to grow as evidenced by PharmEasy’s acquisition of digital healthcare company Medlife. The digital healthcare segment it operates in now is pegged at over ₹40,000 crore. Competition is however getting strong. Others in this segment include 1MG, where Tata Digital (a 100 per cent subsidiary of Tata Sons) said it would acquire a majority stake and Netmeds, where Reliance Industries announced its investment of ₹620 crore.

A “close knit gang” of five boys and three girls is the strength of API, concludes Siddharth.