Daybreak - Siddharth Shah and family want to fix your smile. Pharmeasy 2.0 may need fixing first

Episode Date: June 24, 2025

The rise and fall of Pharmeasy is well documented. Once the poster child of the e-pharmacy boom, it reached a dizzying valuation of 5.6 bn USD at its very peak. But unfortunately, as we all know now, it didn’t last. Today the company is worth just 450 million USD – which, is a 90 per cent drop. From aggressive acquisitions to regulatory hurdles, and a failed IPO, Pharmeasy’s journey has been a cautionary tale of overreach.But the brains behind the operation – Siddharth Shah – isn’t done yet. He’s back at it again with a new venture. Except this time, Shah has taken on the role of investor – while the founder spotlight is on his wife, Arpi Mehta. Their latest bet? MakeO – a startup that wants to bring invisible aligners, at-home cosmetic dentistry  and dermatology treatments to your doorstep. But despite its irresistible promise – convenience repackaged as medical-grade innovation – MakeO seems to be struggling to take off. Turns out, MakeO is drawing quite heavily from the Pharmeasy playbook. Will it end the same way? Tune in. Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get an alert as soon as we release our first episode, please follow Intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. The rise and fall of Farmyzy is well documented.

Once the poster child of the e-pharmacy boom, it reached a dizzying valuation of $5.6 billion at its very peak. But unfortunately, as we all know now, it didn't last. Today, the company is worth just for $50 million, which is a 90% drop. From aggressive acquisitions to regulatory hurdles, even a failed IPO, Farmyzzi's journey has been a cautionary tale of overreach. But the brains behind the operation, Siddharat Shah, well, he isn't done yet. He's back at it again with a new venture.

Except this time, Shah has taken off. on the role of investor, while the founder's spotlight is now on his wife, Arpi Mehta. Their latest bet? Meko, a startup that wants to bring invisible aligners, at-home cosmetic dentistry and dermatology treatments to your doorstep. They started off with Tootsie, which was basically a dental aliner company. And basically the company just offers dental aligners for any kind of teeth issues like crooked teeth, alignment issues and all of those, all at the convenience of your house.

Skinzie, on the other hand, offers cosmetology services that you would get from maybe a clinic like cosmoderma or maybe a VLCC, right? So these clinics basically offer you all of these cosmetology surgeries that is like laser and then like, you know, your hydrophacials. That's my colleague DVLS Pranati. Now, MECO promises these treatments at mind-numbingly low prices. That's what got Pranati curious, how despite its irresistible promise, convenience repackaged as medical-grade innovation,

Meiko seems to be struggling to take off. In January, the company raised funds at a valuation of a little over 2,200 crore rupees. And less than six months later, it is reportedly seeking capital at half that figure. Turns out, Meiko is drawing quite heavily from the Farmeasy playbook. They both have followed the same kind of pattern. and that's how you see and like, you know, that's how we can call it

like a Farmy Z2.0. They identified high friction, high cost sectors in healthcare and then injected venture capital to subsidize prices for all of the very heavy services, very expensive services.

And then they promised scale through tech-led convenience. But what worked well in the beginning very quickly started showing the same cracks in both cases. If you go to any social media platform like, you know, Twitter or Instagram or Reddit, you will just see people talking about how they've gotten, in quote, unquote words, gotten scammed by, you know, Miko and Tutsi.

Welcome to Daybreak, a business podcast from the Ken. I'm your host Rahil Filippos and I don't chase the news cycle. Instead, every day of the week, my colleagues Nikita Sharma and I will tell you one business story that is worth understanding and worth your story. time. Today is Tuesday, the 24th of June. Last month, Pranati booked a trial laser hair removal session through Meko's Skinsie. There is a certain equipment that is required.

There's a certain machine that is required for this laser hair removal. And that definitely does not look like a, you know, transportable machine, right? So I wanted to try out this service to actually understand how is it being done. While the average clinic would offer this particular service for anywhere between tens of thousands to a couple LACC, Meko offered it for an almost too good to be true price of $99. So Pranati made the payment and then she waited. Now the next day morning it was 8, it became 8.30, 9 o'clock, nobody showed up. Not a call, not a text, nothing.

At the end of the day, I get a call from one of their customer care executive saying, oh, we had booked a laser hair removal appointment. this morning, but it did not happen or whatever, can you come down to our clinic so we can do it here? Now, beyond just the minor monetary inconvenience, this incident pointed at something far more serious. A casual attitude to service delivery in a business dealing with people's bodies and faces. Miko's pitch is certainly seductive. But beneath it all, it's replicating the same mistakes India's health care boom has made before. Before we unpack what those are, let's try and understand the business better.

When it was founded back in 2018 by Alp Mehta, Praveen Shetty, Manjul Jain and Anuradha Kala, there was only Tootsi, the aligners provider. And then four years later, Skinze came along. It was only in 2022 that the two companies were consolidated under MECO. That's when it all ended up becoming a pricing play. Now, every single time you book a service, a customer care person will call you. They will tell you that since you've had a chat with us already, we will be giving you an offer at a discounted price

and you can get aligners at even 46,000, 47,000. Now that is like the cheapest that is available in the market for a service like aligners. So affordability is the real moat in the case of MECO. Case in point, it's business overseas. They went ahead and acquired a Singapore-based company that has its subsidiaries in the Gulf. So MECO is available in the Gulf as well.

They're available in Dubai and Qatar and Bahrain. and in Kuwait. And Smile New is a company that has been established in the Gulf for a while. And they acquired the company. So in terms of capital costs, they do not have much. They've just rebranded that company as MECO. But for the same aligners over there, if you look at the price conversion, it starts at 1 lakh in the Gulf.

Even with that hefty premium, its international operations contribute only 7 crore rupees in revenue. So you see what I mean? It's a lot like what Farm Easy did to diagnostics. Back when it acquired thyroid care and started offering blood tests at home, it turned medical testing into a logistics problem. It ended up commoditizing the blood test. Accuracy started mattering far less than scale. In fact, just last year,

the Ken ran a report on how Farmy Z was producing a significant amount of flawed and misleading results in its push for convenience. Now, Miko is doing something similar, but with aligners and skin treatments instead. With that comes an ever-growing list of problems and challenges. Inconsistent treatment quality, missed appointments, and procedures performed by personnel who may not be adequately trained. And then last year, the Dental Council of India noticed.

DCI alleged that Tootsi was violating their employing norms. Basically, they were sending out untrained and unregistered personal for personal. for dental procedures. A founder of a rival firm that Pranati spoke to said quite simply, no dentist with an MDS degree would want to work for a startup. So instead, the founder said they train undergrads and put them to work. And it chose in both the product and the service. For instance, Invisaline, which is a US-based aligner's company,

asks for a full set of mouth scans and x-rays. Meiko, meanwhile, often begins with mail-in impression kits, costing about $799 processed without an in-person clinical review. So treatment failures end up becoming quite common. When we reached out to Arpi Mehta, she explained that her treatment planning team is led by some of the most accomplished orthodontists across India.

She said each aliner and patient plan is 100% certified by orthodontists. And yet, the pattern is noticeable. The same eagerness to scale, the same price-led expansions, and the same investor-fueled burn. Stay tuned. Now, Meiko has a pretty lengthy list of investors, 114 total ranging from angels, VCs, P-E firms and institutions. It's managed to raise over 872 crore rupees from all of them combined.

But the recurring thread tying all these rounds together has been Mehta's husband. Shah has participated in nearly every funding round, investing around 45 crore rupees as an angel and 94 crore more through the Siddhar Shah family trust. His sister Priyanka Shah has added 54 crore via her own trust. Mehta's also invested over 10 crore through her own trust fund. That's about 200 crore rupees only from the Shah family. So both the companies have a lot of common investors. One that really stands out is Sivan and Mankikar and his family, that is his son and his wife.

They've invested in Farmyzie and they've also invested in Mako. Now the thing with Shivan Mankeekar is he is a management professor and we had reported in one of our earlier stories that the entire idea of Farmy Zee started off in their house with Shivan Mankeekar. Like he was the one who gave the idea of Farm Easy to Sadat Shah and his family, right? But unfortunately, this hasn't exactly resulted in profits. Seven years in, Meko is still loss-making. Its cash reserves are also not much to go by.

95 crore in March 2024, which is just 4 crore up from the year before. Meanwhile, long-term borrowing has quadrupled, while short-term debt has dipped slightly. You see, to stay afloat, Meko has turned to expensive debt. It's issued non-convertible debentures to lenders such as stride, Alteria Capital, Incred and Black Soil at interest rates of 13 to 15% annually. At the same time, Meko cut its workforce by 16% over FI23 to 24.

People in the note told again that the layoffs were an attempt to manage burn and slow down cash outflow. After all, this is a pricey business. Although the cost of manufacturing a set of aligners in India is surprisingly low, between 600 to 1500 rupees. That means, one thing and one thing only. Fat margins.

In this case, we're talking around 70%. But those margins tend to disappear because of the brutal economics of D2C dentistry. There are very few success stories in this particular business. The often cited example is that of Smile Direct Club, a US-based D2C aliner that went public in 2019 at a $9 billion valuation. Cut to 2023, it filed for bankruptcy.

In India as well, it has been the same story. The thing is, with this business, marketing spends are as high as ever, but the number of potential customers that end up placing an order is low. MECO alone shelled out 65 crore rupees on marketing in FI-24. The founders of three competing aliner companies estimated that the entire Indian aliner market is only 1,000 crore rupees. But the biggest problem in all of this is that aligners are a one-and-done product,

with no repeat customers. So D2C players are caught in a look. Spend big to acquire each customer, deliver the product, and then start all over again. It's why many are abandoning the D2C trade. Daybreak is produced from the newsroom of the Ken India's first subscriber-focused business news platform.

What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast, Head to the ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted by Rahil Filippos, produced by me Snigda Sharma and edited by Rajiv Sien.