Context:
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.
Relevance:
GS II: Polity and Governance
Dimensions of the Article:
- E-pharmacies and their Viability
- E-pharmacies versus Mom-and-Pop Chemist Shops
- 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
