PlanetRx Changes Orbit
A message this week on PlanetRx's welcome page directed its 1.4 million registered members to transfer their prescriptions to Drugstore.com, a PlanetRx competitor. PlanetRx has ceased accepting new prescriptions and will stop refills on current prescriptions Feb. 26.
PlanetRx has entered into an agreement to acquire an unspecified specialty pharmacy company. The South San Francisco, CA, company specializes in providing drugs for HIV, cancer and organ transplant patients.
The company's staff of 200 will likely be cut, although the exact number of layoffs was not revealed. At the height of its success, PlanetRx had approximately 500 employees.
PlanetRx's 130,000-square-foot distribution center in Memphis, TN, will be sold, the company said. It also will liquidate other unspecified assets not essential to its new business.
The company said it decided to switch to a specialty pharmacy to take advantage of lower costs and higher margins and growth rates in the niche market compared with the overall prescription drug market. The specialty pharmacy market has annual nationwide sales of approximately $14 billion.
PlanetRx's stock price has plummeted to less than $1 from more than $100 a year ago. The company failed to meet minimum bid requirements for listing on the Nasdaq stock exchange and decided not to contest the removal of its stock listing.
Drugstore.com, which stands to benefit from the demise of its competitor's retail business, has suffered troubles of its own. The company posted a fourth-quarter 2000 loss, laid off 125 employees in January and is projecting further losses this year.