“This problem cannot be solved without technology,” believes Aziz, chief executive, Myra, despite weathering a strong lobby of brick-and-mortar medicine retailers that has made drumming up support from offline pharmacies quite a task.
Today, in spite of being an attractive investment bet and slowly gaining acceptance, e-pharmacies still seek a level playing field. The government, though, is working on new rules to provide just that, while ensuring they are properly regulated. The new draft is expected this month, ET has learnt.
Experts say e-pharmacies are here to stay, with their discounts and doorstep deliveries. Fair and just regulation is the need of the hour but the devil is in the details. What the government ultimately decides could make or break e-pharmacists.
PROBLEMS & PROPOSALS
India is a step closer to implementing laws that ensure patients purchase genuine medicines from online pharmacies. Following stakeholder discussions in March, the draft has been reworked, according to senior government officials close to the development. “This (e-pharmacy) regulation is to authenticate whether the supplier and product are genuine,” says one official, requesting anonymity.
At present, online pharmacies are regulated using legislations such as the Information Technology and Drugs & Cosmetics Acts. E-pharmacies are unanimous in their ask — clarity on rules and recognition of equality to brick-and-mortar counterparts. “It (the law) does not treat online and offline pharmacies on the same ground,” says Tushar Kumar, chief executive, Medlife.
A major change in the draft that officials are mulling is removing a condition that would mandate e-pharmacies to apply for licences to operate in every state separately. Instead, they may only have to register with the Central Drugs Standard Control Organisation, India’s apex drug regulatory body, and apply for licence renewal every three years, said the official quoted earlier. “We want a law where people can operate freely,” says Aziz, adding that licences in every state would be “needless complication.”
Yet, other concerns remain. E-pharmacies ET spoke to said they want clarity on which medicines can be sold without prescription and which kinds of prescriptions are required for each category. They also want to know whether prescriptions have to be stamped and when scanned copies are required. Aziz, for one, feels reorganising the categories of medicines that can and cannot be sold online without prescriptions would help it serve customers better.
Even the consumers will feel burdened to buy everything with prescription. There needs to be some flexibility,” he explains. A second senior government official assures that “the draft will be totally new in view of various objections received on the earlier draft,” and that it will be up for public comments soon.
While waiting for regulations, most large online pharmacies have decided to take matters into their own hands. In 2015, several players such as 1mg, PharmEasy and Medlife formed the India Internet Pharmacy Association (IIPA) to act as a lobby group against misconceptions about their business. Prashant Tandon, chief executive, 1mg.com, heads IIPA, which, he says, would be a united voice to get the government to understand their model.
Today, most of these e-pharmacies have also hired qualified pharmacists, refuse to dispense prescription medicines sans prescription and do not sell Schedule X and other habit-forming medicines, according to a lawyer requesting anonymity. “We came up with our voluntary code of conduct… As a group we decided, we will not be involved in these sales,” says Tandon.
Top e-Pharmacies in India by funding
Company Name, About, Year Founded, Total Funding ($m), Investors, City
While e-pharmacies claim that heavy opposition from offline players has reduced over the years, a lobby group representing over 8.5 lakh brick-andmortar medicine retailers continues to question the former’s presence in India.
In the past four years, the All India Organisation of Chemists and Druggists (AIOCD) has implemented an all-India bandh of offline pharmacies in protest at least twice, says Jagannath Shinde, the group’s president. The hostility mainly stems from the potential of online players to snatch away valuable business. Most e-pharmacies act as the chemist, and only partner with offline players for deliveries of medicines they might not have in stock at the moment, which, in turn, threatens the livelihood of offline retailers, according to Rajiv Singhal, secretary general, AIOCD.
Online pharmacies currently account for only 1% of the Rs 1-lakh crore medicine retail industry in India, say industry executives. The potential is to account for 5-15% of total sales due to an unmet need for easy medicine access and increasing internet penetration, according to a 2016 report by Ficci. “Online players will be the largest… they can eat (the business) of so many (offline retailers),” says Singhal.
AIOCD also claims the government does not have infrastructure to effectively enforce laws against e-pharmacies. Separate regulations are not required for e-pharmacies, which should be banned at this point, as per AIOCD. “It is easy to make rules, but difficult to implement them,” says Singhal.
Citing an incident where a girl in Mumbai was hospitalised in 2015 after consuming abortion pills bought online without a prescription, Singhal says there were no proper checks to ensure these digital businesses operate legally. This incident is said to have later spurred a public interest litigation at the Mumbai High Court, seeking stringent steps against illegal sale of medicines online. This PIL is still being heard and will be taken up next in April.
“They (e-pharmacies) are selling drugs which should not be sold without prescriptions and nobody is keeping a check on it,” argues Singhal, “They are playing with the lives of people.” Even today, at least five to six online medicine retailers are flouting existing laws, alleges Shinde.
Another gray area is e-pharmacies using couriers and delivery personnel—a practice that chemists claim is illegal because there is no guarantee that the drug is being stored and transported in proper conditions. “The Drugs & Cosmetics Act applies to us. It should apply to them too,” feels Singhal. E-pharmacies, on the other hand, seek stringent action against offline chemists violating existing provisions of the Act, alleging a large proportion of them are not even qualified to operate.
CURE IN SIGHT?
However, there has certainly been a slow thaw in the relationship. “Initially, people did not understand the online model,” says Dharmil Sheth, chief executive, PharmEasy. “They get it now,” says Myra’s Aziz. He recounts how, when his startup partnered with a brick-and-mortar chemist in 2016, both were boycotted.
“Distributors stopped supplying, retailers stopped talking to them,” he recalls, adding that today, Myra has around 45 brick-and-mortar partners ready to fulfil orders it cannot. In fact, offline pharmacies themselves have begun to jump on to the tech bandwagon.
For instance, the Maharashtra State Chemists and Druggists Association (MSCDA) and medical services aggregator Medipta Solutions announced a collaboration in March to launch an IT platform that aggregates all medicine retailers so they can reach patients in 20 minutes using digital prescriptions and a delivery management software, according to Shinde, who is also MSCDA’s president.
STILL A HOT BET
Despite the evolving script, the sector has never been shy of drawing investor dollars, with players such as Mumbai-based PharmEasy receiving an infusion of approximately Rs 196 crore in series C last month. “Investor interest is at an all-time high now,” says Dhruv Suri, partner at law firm PSA, which has several large e-pharmacists as clients. “It is about how you are able to bring efficiencies in the supply chain,” adds Sheth of PharmEasy. Around 61% people prefer buying medicines online, shows a 2016 survey of 4,600 persons commissioned by the Consumer Online Foundation and conducted by the Bureau of Research on Industry and Economic Fundamentals.
“A senior citizen living alone can’t go to the neighbourhood pharmacy every time,” said Bejon Misra of the Patient Safety and Access Initiative of India. “But right now, this (online pharmacies) is illegal. There is a need for a change in the existing law.” Key problems in buying medicines today include inefficient, fragmented supply chains and poor availability of medicines at chemist stores, according to Tarun Davda, managing director at Matrix Partners India, which invested in Myra.
Most chemists only fulfil in entirety 55-65% of orders and face issues like low inventory turns and expired, duplicate or fake medicines due to this, according to him. All of these problems can be solved to a large extent using technology, he said.
The journey for online retailers is going to be in tandem with offline chemists, says Aziz. “We cannot deliver 100% of medicines and, in a way, it helps them also. Our customers are happy, they are happy,” he tells ET. The only challenge is regulation. “It is a very simple thing—whatever the law is, let us all follow it properly.”