if the 2010-2020 decade was marked by the incredible rise of Indian tech startups aided by copious amounts of venture capital and founder chutzpah, then the current decade is the one when India’s older and more lumbering business groups fight back. One by one, we’re seeing business groups like Reliance, Tata, and Adani enter new-age sectors with the right mix of balance sheet heft and regulatory tailwinds. In healthcare, for instance, Reliance acquired e-pharmacy Netmeds in August 2020. Then Tata acquired e-pharmacy 1mg in June 2021. That left PharmEasy, the nimble and canny market leader that managed to stay ahead of everyone by building a “Jenga tower of acquisitions” at a rapid pace. Now that the dust has cleared, PharmEasy has filed its documents to go public at an expected valuation of $8-9 billion. As all of this was playing out, a company was quietly seething at the valuations being thrown about for “healthtech” startups. That company was Apollo Hospitals, India’s largest hospital and healthcare group. Now, it's decided it wants in. Last year it spun out Apollo HealthCo, a new healthtech that would house over 4,200 pharmacies, its e-pharmacy called Apollo 24/7, and the back-end distribution business that supplied medicines to everyone. Together, the three seemingly make for a digital play akin to PharmEasy’s—buy drugs online through Apollo 24|7, fulfilled by offline stores, or book doctor consultations and diagnostic tests, fulfilled by the Apollo Group’s healthcare network. As you read this, the Apollo Group is trying to raise money for HealthCo, valuing it at “north of $2.5 billion”. Multiple sources in the hospital and investment sector confirm that Apollo has held talks with “many investors, including Amazon, Microsoft, Google Ventures, and all leading venture capitalists”. “I know for a fact that the two [Apollo HealthCo and PharmEasy] are locked in [an ouroboros] kind of situation. PharmEasy wants Apollo to raise money and get a benchmark valuation so that it can justify its valuation and list; Apollo wants PharmEasy to list first so that it can say it’s worth the same amount,” says the promoter of a large corporate hospital. In its own eyes, Apollo is pitting HealthCo against PharmEasy and wants a “healthtech” valuation. Except, PharmEasy last commanded a 17X revenue multiple based on its pre-IPO fundraise. Whereas Apollo HealthCo is looking more like… 2.5X. What gains? All of that and a lot, LOT more in our meticulously reported and pieced together articles today on the challenges of carving out a healthtech from under the "parental banyan tree”. There’s support, but there are also the deep roots tied to the group’s creative and complex structuring through a complicated mesh of 37 subsidiaries where related-party transactions and cross-business synergies form the core.
