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Regulating Online Sale of Drugs in India


Recently, the Ministry of Health pulled up at least twenty companies including Tata-1mg, Flipkart, Apollo, PharmEasy, Amazon and Reliance Netmeds, by issuing them a showcause notice, for selling medicines online.


GS II: Polity and Governance

Dimensions of the Article:

  1. E-pharmacies and their Viability
  2. E-pharmacies versus Mom-and-Pop Chemist Shops
  3. What next?

E-pharmacies and their Viability

  • Ministry of Health has a mixed approach towards e-pharmacies
  • COVID-19 created an acute need for door step delivery of drugs
  • The Ministry of Home Affairs allowed e-pharmacies to continue operating during the pandemic
  • Banning e-pharmacies may lead to them going underground
  • Regulating the sector is a better option than banning it
  • The draft e-pharmacy rules were proposed in 2018, but not notified due to political sensitivity
  • Multiple court orders, including a Parliamentary Standing Committee report, have called for regulating e-pharmacies

E-pharmacies versus Mom-and-Pop Chemist Shops

  • E-pharmacies emerged in 2015 with private equity money and offered hefty discounts on medicines to gain market share
  • E-pharmacies claim to facilitate doorstep delivery and have tie-ups with retail chemists
  • Profit margins in the drug retail industry are thin, leading e-pharmacies to struggle to make money
  • Companies like PharmEasy are buying out wholesale drug distributors to circumvent retail chemists and build their own supply chain
  • Reliance acquired C-Square Info Solutions, a software company catering to local pharmacists
  • E-pharmacies have recorded losses year-on-year since 2015, with Tata-1 Mg and PharmEasy posting significant losses in FY22.

What next?

  • E-pharmacies have seen single-digit growth from 3% to 5% in the past eight years, with consumers using them as an additional option for buying chronic care medicines
  • Neighbourhood pharmacy stores still cater to acute care and emergency patients
  • E-pharmacy players are opening brick-and-mortar stores to offer more options to consumers, with Reliance planning to open 2,000 more outlets
  • Apollo Pharmacy and PharmEasy have their own physical stores, and Tata-1Mg is adding more to their existing 50 stores
  • Mom-and-pop pharmacists are also offering home delivery options through their store apps and Whatsapp
  • The Ministry of Health needs to regulate the e-commerce model in the drug space, which is moving towards a hybrid mode.

-Source: The Hindu

February 2024