IPO Alert: Wellness Forever Medicare files papers for a public listing

The Indian pharmaceutical industry is the world’s third-largest by volume and 14th largest by value. The turnover of the country’s pharmaceutical market was estimated at ₹2.9 trillion in 2020, which is equally divided between the export and domestic markets.

The domestic pharmaceutical market, which was valued at ₹1.5 trillion last year, grew at a compound annual rate of approximately 10% over the past five years. It is expected to grow at a similar rate and reach ₹2.53 trillion by 2025.

Adar Poonawalla-backed Wellness Forever Medicare Limited recently filed a draft red herring prospectus with market regulator SEBI to raise around ₹15 billion through an initial public offering. The IPO consists of a fresh issue of shares aggregating up to ₹4 billion and an offer for sale of up to 16 million shares by shareholders.

Wellness Forever plans to utilize net proceeds of ₹702 million from the offering for the expansion of company-owned stores. Around ₹1 billion will be used for repayment of borrowings availed by the company. A part of the proceeds will be used for incremental working capital requirements and the remaining amount will be used for general corporate purposes.

Pharmacy

Wellness Forever is one of the largest retail pharmacies and wellness networks by store count and is a leader in Western India in terms of revenues. The company is an omnichannel, hyper-local retail network that serves as a one-stop solution for customers.

The Mumbai-based pharmacy chain has a network of 236 stores, spanning across Maharashtra, Goa, and Karnataka. The stores are strategically located and are open round-the-clock, mostly.

Key Numbers

Wellness Forever’s revenue grew to ₹8.71 million in fiscal 2020 from ₹6.83 million in the previous year. Its profit stood at ₹112.5 million, against ₹80 million a year ago.

The Indian retail industry is characterized by competition that often puts profit margins under pressure. The company’s main competitors include MedPlus, Noble and Apollo pharmacy. It also faces competition from independent pharmacies, telemedicine providers and e-commerce retailers dealing in prescription medicines.