 "Phaneesh Murthy-backed online pharmacy Zigy cuts back operations to just one city")
Phaneesh Murthy-backed online pharmacy Zigy has shut operations in four out of the five cities it operates in, citing inability to raise funds due to lack of clarity on regulations surrounding the online pharma sector in India.
Zigy has shut its operations in Mumbai, Delhi, Hyderabad and Chennai, choosing to operate only in Bengaluru where it had won favour from the court. The company says it is trying to conserve cash in the hope that it can survive until it finds an investor.
“It will be a smaller team focusing on only some cities so that we can conserve the case to stretch till the next round of funds come. We are still expecting to get into some serious discussions with investors, and hopeful if the funds come in we’ll be able to retain some of our employees,” said Hemant Bhardwaj, MD and CEO of PM Health and Life Care which owns Zigy.
Sales of prescription drugs online has kicked off a huge debate in the government, which set up a special panel last July to build a framework to regulate such players. While the framework is delayed, several state governments have given into pressure from offline pharmacies to even ban such players.
Several state governments are deeming online pharmacies illegal and forcing them to shut down by taking back licenses. They are doing this on the grounds that online pharmacies were selling people drugs without prescriptions, while Zigy argues that it ensure users upload a scanned copy of a prescription.
“My only issue is that regulators should judge players on their merits and taking action that paint all the players with the same brush is hurting the industry. The online industry can bring a lot of good things, so why are the regulators taking so much time to come up with a framework?” added Bhardwaj.
Last year, nearly 850,000 small chemist stores in India were shut for a single day as a sign of protest against online players such as Zigy and 1mg stealing their business. These offline players accused e-pharmacies of selling drugs without prescriptions and made it easier for children and abusers to get their hands on certain drugs.
Moreover, disallowing services such as Zigy from advertising itself to customers until the framework was ready, the government cut off a massive chunk of Ziggy’s business. Given the state of the online commerce industry, Zigy burnt through the $5 million it had raised from friends and families of the founders.
“We invested a certain amount and can spend only that much. Someday it will vanish, because nobody is coming in front to put in money. See, the ecommerce game, especially in the initial stages is a cash burn game,” said Bhardwaj
