PharmEasy, an Indian drug and medical services platform, has laid off employees due to difficulties in raising funds amidst a slowdown.

Sources familiar with the situation disclosed to DealStreetAsia that although the exact number of employees impacted by the downsizing is unknown, the company has been letting go of staff in various departments, including logistics, procurement, operations, sales, design, and technology. While one independent source suggested that around 40% of the workforce might have been affected. 

According to the aforementioned sources, while the company informed many affected employees that the layoffs were due to cost-cutting measures and insufficient funding, some employees were also let go due to performance-related concerns.

Last year in August, PharmEasy announced plans to raise funds through a rights issue with existing shareholders after withdrawing the draft red herring prospectus (DRHP) to launch its IPO and collect approximately Rs. 3,000 crore to Rs. 3,700 crore. The reason for the withdrawal was stated as "market conditions and strategic considerations."

Later in November, the startup secured an unspecified amount of debt financing from EvolutionX Debt Capital, a platform that provides financing to businesses in the growth stage.

Since its inception in 2014, PharmEasy has raised over $1.12 billion in funding across 16 investment rounds, with support from investors such as Temasek, B Capital, Prosus, Steadview Capital, and Nandan Nilekani's Fundamentum Partnership, among others. In its most recent funding round in October 2021, the company was valued at over $5 billion.

As per media reports, the most recent layoffs by PharmEasy were in December.

Entrackr reported that in the fiscal year 2022, PharmEasy's annual losses increased by 4.3 times to Rs. 2,731 crore and its cash outflows from operations also rose by 3.2 times to Rs. 2,589 crore. Earlier this year, the company's CFO, Chebolu V Ram, resigned from his position and joined Entero Healthcare, a healthcare supply chain services company.

PharmEasy's cost-cutting measures come at a time when fund managers are shifting their focus away from the healthtech sector to make investments in the conventional healthcare industry, including hospitals, due to macroeconomic challenges. 

This trend has gained momentum as consumers are favoring physical clinics over virtual consultations, which were in high demand during the pandemic period.