Online pharmacy players are opposed to any type of regulatory framework or license and are likely to raise the issue with the Ministry of Health who recently published a bill to regulate these entities. One of the points likely to be put forward by online players is that they are intermediaries who work with wholesalers and distributors, who are already licensed, so why repeat the process.
Currently there is no law regulating the online sale of drugs by PharmEasy, NetMeds, Tata 1MG and many others. However, these actors follow the sales and safety protocols listed in the Medicines and Cosmetics Act (1940) regarding prescriptions, safety and quality standards. The Medicines and Cosmetics Act 1940 only requires physical pharmacies to acquire a license to sell medicines offline and does not deal with online sales.
On July 9, the Department of Health released a bill titled “Drug, Medical Devices, and Cosmetics Bill-2022” which affects online pharmacies for the first time. The bill stated that no person or entity should “store, display, offer for sale or distribute any medicine online except under and in accordance with a license or authorization issued in the prescribed manner”.
Although the broad outlines of the licensing scheme were not discussed in detail in the current bill, it is mentioned that the central government would consult industry players and other opinions before issuing a broader set. guidelines for online pharmacies. Apart from allopathic medicines, the bill also seeks to allow the sale and stockpiling of Ayurvedic and medical devices.
Lawyers and policy experts FE spoke to are split on the introduction of a licensing regime, as some believe a self-regulatory regime would be sufficient for the sale of drugs online.
Mayank Mehta, partner at Pioneer Legal, said online pharmacies currently operate as intermediaries or as a platform that connects sellers to buyers. He added that most online pharmacies work with large-scale distributors or wholesalers, who sell their inventory through the platform and operate as a marketplace, so a license is not required under the regulations. applicable laws.
“Most online pharmacies operate like e-commerce marketplaces like Amazon, which does not store or sell its own inventory. It helps other sellers and distributors find a new sales channel. But online pharmacies have group or associated companies that store, distribute and sell drugs, and some of them set up proxy sales entities to buy and store drugs… This has caught the attention of the government and , therefore, the ministry has a grudge against them now. said Mehta.
Experts, however, say a licensing regime is still unlikely to hinder the barrier to entry for new start-ups or create challenges for the expansion of existing online pharmacies unless the regime licensing is introduced at the state level.
“Most Indian licensing standards are defined by territory, and even the current licensing standards for offline chemists require shops to obtain a drug retail license from the state government. Online pharmacy start-ups typically ship nationwide and hence the new licensing regime that will be put in place for these business models under the proposed new law should provide for pan-India licensing,” said said Vinod Joseph, partner, Argus Partners (lawyers and lawyers).
Previously, the retail pharmacy lobby and a few policy analysts had raised questions about safety, lack of dosage instructions, prescription tracking and the potentially unregulated sale of prescription drugs through online mediums. But Joseph of Argus partners believe that online pharmacies can maintain databases of their sales records and user prescriptions to better comply with government standards and audits.
“Existing physical pharmacies are not exactly compliant and it is actually very easy to buy medicines offline without a prescription in the country. Startups offering online sales can keep a database record for any future auditing that can easily track patient identities, prescription records, location, and the physician prescribing the drug,” Joseph added. .
Apart from e-commerce marketplaces, online pharmacies have largely benefited from the Covid-induced lockdowns as many Indians have been forced to buy essential medicines online. As the demand for online pharmacies has exploded, investments in the segment have also increased. API Holdings, which owns an array of brands including online pharmacy brands PharmEasy, had filed draft documents to raise Rs 6,250 crore through its proposed IPO in November 2021. Prior to that, PharmEasy was valued at 5 .6 billion (Rs 42,197.79 crore) in a pre-IPO round of Rs 2,635.22 crore in October 2021.
A KPMG-FICCI report in April suggested the online pharmacy market grew at an annualized rate of 40-45% due to increased internet connectivity, compounded by strong post-Covid e-commerce demand. . The report also states that the size of the online pharmacy market was over $50 billion in 2020-21 with a potential to touch $130 billion by 2030.