Indian online pharmacy PharmEasy has seen its valuation plummet by a staggering 92% to around $456 million, according to disclosures from its investor Janus Henderson. This significant drop comes despite the startup securing over $200 million in fresh capital earlier this year and preparing to file for an initial public offering (IPO) next year.

The valuation was revealed in Janus Henderson's latest filing for the period ending September, which valued its holding of 12.9 million shares in PharmEasy at $766,043. Notably, the fund had originally spent $9.4 million to acquire these shares, highlighting the dramatic decline in the startup's valuation.

PharmEasy's financial struggles are not new, with the startup facing a funding crunch and debt obligations. In 2023, the company launched a rights issue to raise capital, allowing shareholders to purchase shares at a discount. The rights issue was oversubscribed, with PharmEasy co-founder Dharmil Sheth stating that the startup raised $417 million. A regulatory filing in April 2024 showed that the startup had secured around $216 million.

Despite these efforts, PharmEasy's current valuation places its worth well below the $600 million it paid to acquire diagnostic lab chain Thyrocare in 2021. The startup has raised over $1 billion to date, backed by prominent investors such as Prosus, Temasek, TPG, and B Capital. PharmEasy operates one of the largest online pharmacies in India, but its financial challenges have persisted.

The startup's financial woes emerged after it deferred an $843 million IPO planned for November 2021. It then turned to debt financing, including a $300 million loan from Goldman Sachs. However, the company struggled with repayment and raising new equity in a deteriorating market, leading to its current valuation woes.

The significant drop in valuation raises questions about PharmEasy's ability to recover and achieve a successful IPO. The startup's financial struggles serve as a cautionary tale for the Indian startup ecosystem, highlighting the importance of sustainable business models and prudent financial management.

As PharmEasy moves forward with its IPO plans, it remains to be seen how the startup will address its financial challenges and regain investor confidence. One thing is certain, however: the road ahead will be fraught with challenges, and PharmEasy will need to demonstrate significant growth and stability to justify its valuation.