Online pharmacy

Source: By Pranav Mukul: The Indian Express

Recently, India’s online pharmacy market saw two significant merger and acquisition dealsReliance Retail picking up majority stake in Chennai-based e-pharmacy Netmeds, and PharmEasy moving to merge with smaller rival Medlife. And the launch of e-commerce giant Amazon’s online drug delivery services. This has suddenly caused activity in a sector from which large investors have shied away due to lack of proper regulations.

While Covid-19 and the subsequent behavioural shift towards e-commerce may have catalysed growth for online pharmacies, the sector was already poised to grow seven-fold by 2023 to $2.7 billion. This was mainly on account of the challenges faced by physical pharmacies that gave their online counterparts a problem to solve. Experts believe that e-pharmacies will be able to solve the problems that traditional pharmacies couldn’t. But for this, they need to have a large-scale presence that calls for either huge investments or consolidation.

Unlike the US, where the top three pharmaceutical distributors have a 90 per cent share in the market, India’s is a fragmented market with over 8 lakh pharmacies — this gives online pharmacies an opportunity to capture their space without opposing large traditional retailers. Currently, companies in the Indian e-pharmacy space mainly operate three business modelsmarketplace, inventory-led hybrid (offline/online) and franchise-led hybrid (offline/online) — depending on the way the supply chain is structured. In addition to companies like Netmeds, Medlife and PharmEasy, other players in the segment include online healthcare startups such as 1mg, Practo, Myra as well as traditional chemists such as Apollo Pharmacy.

The government had floated draft regulations for e-pharmacies but these guidelines never saw light of the day. While the lack of proper rules governing the online pharmacy space has kept large investments at bay, it has allowed the existing players in the market to grow and overcome the challenges faced by traditional retailers, which account for almost 85% of the country’s total pharmaceutical sales. For pharmacies overall, India’s drug regulations require retailers to get a licence to dispense medicines from the state in which they are being sold. This may have been a factor in Amazon currently restricting its pharmacy sales to Bengaluru for the time being.

Considering that e-pharmacies currently are not regulated, their operations are constantly met with opposition from brick and mortar chemists. In the absence of clear regulations, online pharmacies currently operate as marketplaces and cater to patients as a platform for ordering medicines from sellers that adhere to the Drugs and Cosmetics Act and Rules of India. Other regulations, like the Information Technology Act and the Narcotic Drugs and Psychotropic Substances Act, also apply.

Work on regulations specifically for e-pharmacies has been in progress for several years now. Draft rules for e-pharmacies sought to define the online sale of medicines, what an e-prescription means and what type of licences online firms would need to get from regulators to operate. The draft had proposed to allow e-pharmacies to get a central licence to operate from the country’s apex drug regulator, which could be used to allow it to operate across the country.

It also proposed to define e-pharmacies in a way that would allow them to distribute, sell and stock medicines. The proposed regulations prevent them from selling habit-forming drugs like cough syrups specified in Schedule X of the Indian drug regulations.

Regulations for online pharmacy players have been in the works since 2016 but are yet to come out. The last attempt to clear these regulations saw the draft rules being pushed through two expert committees under the Central Drugs Standard Control Organisation–India’s apex drug regulatory body–in June 2019. That iteration of the proposed regulations suggested the inclusion of provisions for uploading e-prescriptions.

However, a few months later, the regulations ended up with a high-level group of ministers said to include home minister Amit Shah, defence minister Rajnath Singh, health minister Dr Harsh Vardhan and chemicals and fertilisers minister DV Sadananda Gowda.