What Lies Ahead For Online Pharmacies?

The online pharmacy trade in India has witnessed a great push immediately after the pandemic, similar to other healthcare segments, according to media reports the e-pharmacies market in India stood at around 344 million dollars in 2021 and is expected to expand at a rate of 21.28 per cent going forward.

The online pharmacy trade serves as a marketplace or as a platform for patients to order medicines from sellers who follow the regulations related with distribution of drugs like Drugs & Cosmetic Act 1940, Drugs and Cosmetic Rules 1945 among others regulations. But these laws do not apply to e-pharmacies as they act as intermediaries and are only subjected to Information Technology Act 2000, the act serves the e-commerce trade as a whole and does not mention e-pharmacies.

Recently the online pharmacies have received a lot of hostility from its on ground competitors like distributors and chemists. Associations like CAIT(Confederation of All India Traders) and IMA (Indian Medical Association) have also heavily criticised the e-pharmacy trade by big players in the sector. 

The associations allege that the online companies have deep pockets and hence they indulge in practices like dumping capital and setting predatory prices to capture the market which throws the brick and mortar retailers out of competition.

The Indian Medical Association released a white paper on online pharmacies in 2022 in which they made a case for disallowing the e-pharmacy trade, the paper said “Indian Medical Association is against online pharmacies in India. This will encourage substitution of cheaper and spurious drugs by the online stores and the doctor-patient confidentiality will be affected.”

The CAIT members on the other hand met with the Union Health Minister Mansukh Mandaviya on 2nd June to express their concerns and to demand retaliatory actions from the government on the e-pharmacy trade.

“The Drugs and Cosmetic Act 1940 which applies on selling of medicines in India, that law provides two significant things, one every chemist should have a pharmacist and second that the doctors prescription should be paramount for providing medicines, but in the case of online pharmacies both these conditions are not being met. And in the Drugs and Cosmetic Act there is no mention of online pharmacies, so fundamentally, an issue which is not covered under the act cannot be a legitimate business activity. Therefore we felt that the government should intervene and take suitable action as per the law,” said Praveen Khadelwal, National General Secretary, CAIT, while speaking with BW.

The major players in online medicine trade are companies like Reliance-backed Netmeds, Pharmeasy, Tata-backed 1MG, and Amazon Pharmacy among many others.

Mr Khandelwal further added “When one indulges in practices like predatory pricing, deep discounting, loss funding, and takes inventory control under one's own fold, now this results in creating an uneven level playing field in the market and in such a situation the worst sufferer is the brick and mortar shops and all of this is not allowed as per the FDI policy and Drugs and Cosmetic Act.”

The draft proposal to amend the Drugs and Cosmetic Rules 1945 has been in the works since 2018, but the rules have not been notified or implemented yet. The draft rules will lay out the framework under which the online medicine trade will function.

Mr Khandelwal said he asked the Union Health Minister to implement the draft rules as there is a need to curb the violations by the online pharmacies, he has also requested the Minister for the formation of a regulatory body not just for the e-pharmacies but for the e-commerce industry as a whole.

Mr Khandelwal further explained that the first step that will come from government is the roll out of draft rules for online pharmacies or for online trade otherwise to eliminate the illegalities that are being done at the moment by big players, “We are just demanding a level playing field, if they abide the regulations we are ready to face the competition,” he added.