BUSINESSWEEK ONLINE : JULY 24, 2000 ISSUE
BUSINESS WEEK E.BIZ -- SPECIAL REPORT Drug Doldrums Last month, Michael Beindorff, CEO of online pharmacy PlanetRx.com Inc., went to see Nicholas Cage's new movie, Gone in 60 Seconds. With high-speed car chases and beautiful women, it's the perfect escapist film for guys. Not for Beindorff, though. As he munched his popcorn, ''9 of the 11 slides they showed before the movie were about job opportunities in Silicon Valley,'' he says with a sigh. All Beindorff could think of was losing his engineers to other startups. He has reason to worry: PlanetRx is running out of cash. With its stock down 95% from its peak to less than $2, the company has few prospects for raising more dough. PlanetRx has $55 million in the bank and, even after cutting expenses and laying off 70 employees, it's burning through about $6 million a month. Without more cash, the company can survive for less than 10 months. In the end, PlanetRx discovered that trying to sell shampoo, aspirin, and prescription drugs on the Net is a pretty crummy business. Because corner drug stores are everywhere, Net sales don't offer much more convenience. Company sales are expected to hit $9 million in the second quarter, about the same as in the first quarter, when it lost more than $35 million. ''There was an amount of hubris in thinking that they could radically shift the way consumers have always purchased health and beauty aids,'' says Claudine Singer, a market researcher at Jupiter Communications Inc. Now, Beindorff is scrambling to survive. He eliminated the $8 million the company was spending quarterly on TV ads. And he altered a backbreaking deal with Express Scripts Inc. under which PlanetRx paid the Maryland Heights (Mo.) wholesaler $14.9 million a year to be the exclusive online outlet for Express Scripts' HMO and drug store customers. The clock is ticking. Beindorff has hired Goldman, Sachs & Co. to find an investor or an acquirer. Unless Biendorff finds a big investor soon, PlanetRx is done for, even if it's not gone in 60 seconds. By Jim Kerstetter _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The Fight for Survival TABLE: Dot-Com Survival Management Guide CHART: Venture Capital Investments Are Tumbling...And Investors Are Leery of New Tech Companies.. Drug Doldrums Sour Notes INTERACT E-Mail to Business Week Online

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