Despite receiving regulatory approval to launch its initial public offering (IPO), API Holdings, PharmEasy’s parent company, is being hit hard by a previous collapse in the unlisted market. PharmEasy shares lost half of their value in the pre-IPO market, falling to Rs 70-75. Almost a few months ago, it was trading at Rs 135-140. The shares dropped sharply to Rs 65 during its worst trade.
SEBI, the capital market’s regulatory body, gave the Mumbai-based med-tech company the green light to offer its Rs 6,250 crore primary stake sale. Existing shareholders have no plans to sell their shares, while investors are eager to learn the causes of this precipitous drop. Here are the prime reasons behind PharmEasy’s share price fall.
Table of Contents
Stocks of modern technology-based startups such as Paytm, PolicyBazaar, Nykaa, Zomato, CarTrade Tech, and others that tried to get huge gains in domestic stock markets with their IPOs are now selling and buying at a 20-50% reduction to their issue price. The sell-off in tech-based startups and growth stocks in the United States has fueled the declining trend in Indian tech-based companies. This fear of broader fluctuation in tech IPOs has impacted unlisted and pre-IPO tech companies such as PharmEasy, MobiKwik, Bira, and others.
Confederation of All India Traders (CAIT) has filed a complaint with the SEBI accusing PharmEasy’s business model is built on “gross illegality.” CAIT and another association of distributors filed a complaint against PharmEasy in a letter, mentioning the legal mess concerning online medicine sales. To ensure fair trade practices, SEBI has a disclosure-based policy for businesses looking to raise funds through IPO. However, this statutory governing agency does not provide clear and direct approvals for an IPO, instead only providing observational data on the IPO prospectus submitted to the regulator. Such disruptions, however, have the ability to delay, if not obstruct, PharmEasy’s IPO timeline (API Holdings).
Share prices are directly related to supply and demand. Stock prices fall as a result of oversupply and weak demand. That means if more individuals would like to sell a stock than purchase it, supply will cross the demand due to this high, causing the price to fall. With the tech sell-off, supply in the unlisted space has only increased. However, demand fell, influencing the market price.
PharmEasy maintains a consistent market leader, serving approximately two times more customers than its closest competitors, Medlife and MedPlus, who are competing for second place. Surprisingly, Netmeds comes in last place. Even after its acquisition by Reliance, it has so far failed to take advantage of Jio’s scale.
PharmEasy has a 40% high price over 1mg, including on average order values. Its approach to serving prolonged patients may be critical to retaining customer loyalty as well as a hefty price tag. Therefore, a merger with Medlife, which has a more “value” base, could assist PharmEasy in consolidating its overall market position.
Considering PharmEasy’s phenomenal performance in attracting patients to buy on its platform, the frequency with which these patients are served, and the relatively high price it gets, PharmEasy rises up as the clear market leader, accounting for more than 40% of the market! Medlife has nearly a quarter of the transaction value share and has good and stable performance measures. While the online pharmacy industry is still in its early stages, the entry of giant corporations and consolidation among existing players marks a new phase in the industry.
PharmEasy provides an enticing added value to all its investors who buy unlisted shares of the company. The company serves 87,194 pharmacy agencies, 3,261 wholesalers, 4,617 healthcare clinics and consultant doctors, and 926 hospitals. The online marketplace has 25 million registered users. Customers who fill prescriptions through this company’s marketplace can get teleconsultation services. API Holdings Limited sells diagnostic tests and chronic disease management services in this marketplace.
PharmEasy is India’s largest digital brand that offers healthcare services and pharmaceutical products. It has bestowed a licence to Axelia to run the company’s operations in India under the brand name “PharmEasy.” Moreover, the company utilises highly advanced technologies and new-age programming techniques. It has also created several custom algorithms using data science models, AI/ML techniques, and specialised workflows to amplify its business.
Retail investors can buy PharmEasy unlisted shares to get significant returns, considering the company’s robust background, the number of acquisitions it has made of leading pharmacy startups, and the availability of hands-on information about the company. Investors can analyse that the company is here for the long run, and they can expect greater returns against their investment in PharmEasy. However, as an investor, you must seek the assistance of pre-IPO stock experts to learn how to avoid risks and better manage your investment portfolio.