In the first half of the fiscal year, online pharmacy startup PharmEasy delivered disappointing results for global investment firm Prosus, posting an internal rate of return (IRR) of -38%. This underperformance mirrors a continuing trend, with PharmEasy’s IRR at a far worse -44% during the same period in FY24. Despite attempts to cut its losses, PharmEasy is still facing significant hurdles in the competitive online pharmacy market. The company's revenue for FY24 dropped 15% year-on-year to Rs 5,644 crore, with intense competition from rivals such as Tata 1mg, Reliance’s Netmeds, and Apollo 24×7 contributing to its struggles.

 Competitive Pressure in the Online Pharmacy Sector 

PharmEasy’s decline in market share is attributed to the increasing competition in the online pharmacy space. The entry of large players with more resources has created challenges for PharmEasy to maintain its previous dominance. Despite reducing losses in FY24, largely due to lower goodwill impairment charges and a general reduction in operating expenses, PharmEasy continues to face difficulties in regaining its position in the market.

 Strong Returns from Other Investments 

On the other hand, several other companies in Prosus’s portfolio have reported strong performance. B2B e-commerce platform ElasticRun stood out with an impressive IRR of 23%. Meanwhile, food delivery giant Swiggy and digital payments company PayU India both posted IRRs of 21% each, highlighting their solid returns. Social commerce platform Meesho also performed well with an IRR of 20%, while the ed-tech startup Eruditus generated a more modest but positive return of 14%. Eruditus remains the only profitable company in Prosus’s ed-tech portfolio during the first half of the fiscal year.

 Prosus' Investment Portfolio in India 

Prosus, over the past seven years, has invested approximately $8 billion across 30 companies in India. This substantial commitment showcases the firm’s belief in the potential of the Indian market despite the challenges faced by some of its investments. Additionally, Prosus has continued to make new investments, including $80 million in supply chain startup Mintifi and $100 million in Vastu Housing Finance, demonstrating its ongoing confidence in India's emerging sectors.

 The Future of PharmEasy and Prosus’ Investment Strategy 

While PharmEasy continues to face difficulties, Prosus’s portfolio as a whole has seen mixed results, with certain companies performing well and others struggling. The global investment firm remains heavily invested in India’s tech ecosystem, with plans to further strengthen its portfolio in the country. However, it remains to be seen how PharmEasy’s future unfolds in an increasingly crowded and competitive space. The company will need to innovate and adapt if it hopes to recapture its market position.