New Rules To Make Epharma Registration Simpler And Regulation Clearer

Exercising the powers conferred by Section 12 and Section 33 of the Drugs and Cosmetics Act, 1940, the Indian government has now released a notification, a set of new draft rules that will amend the section 67 of the Act.

As per the notification, which will be effective on or after the expiry of a period of 45 days from the release date i.e. August 28, it will be mandatory for epharma startups to store all their data locally.

Data Localisation: Epharma Startups Welcome Move

The leading epharma companies during their conversation with Inc42, welcomed the move and said that the developments are in sync with the ongoing developments relating to data privacy in the country.

Pradeep Dadha, founder and CEO of NetMeds marketplace said, “We knew that this would be actually coming on board. All our data is currently also stored locally. So, I don’t think that is going to be a hindrance, as it’s definitely possible to store data in India.”

Recently while announcing the closure of NetMeds Series C funding, Pradeep had stated that the final amendment to the Drug and Cosmetic Act which indelibly legitimises e-pharmacies.

He added. “These regulations are something that we and other stakeholders have worked hard on for more than three years. Their passage is a big win for many, but, the biggest winners are the people, who are now assured unrestricted access to affordable medicine, no matter where they are.”

Other epharma companies too seconded the Pradeep’s thought and hail the development as essential for the epharma sector.

Prashant Tandon, co-founder of another Indian epharma company 1mg which has been on an acquisition spree and has already acquired three epharma startups in the last two years, stated, “For the last two-three years, Indian epharma startups are doing exceptionally well, in terms of growth and funding. The latest regulation development is not a surprise. Our data is anyway being stored in India. So, we are already compliant to the latest amendment.”

He added, “The latest announcement is in sync with the draft PDP Bill and DISHA guidelines. The government has been talking about this for some time and we think it was an obvious requirement.”

Epharma Companies Bound To Share Data With Govt

Besides the data, localisation, under the data monitoring policy, the Central Licensing Authority and the State Licensing Authority, in line with the DISHA guidelines, shall monitor the data or information periodically to ensure compliance with the provisions of the Drugs and Cosmetics Act, 1940 and Rules thereunder.

However, under the Section 67K – Disclosure of information generated through the e-pharmacy platform – the notification makes epharma companies duty bound to provide such information to the central government or the state government, as the case may be, as and when required for public health purposes.

“Data privacy has been unevenly covered by the regulation, it does not highlight what information under what circumstance it will be ok to share the data with the government. Also, the regulation does not provide the information regarding the mode of the data transfer between the two,” says Prashant.

However, Prashant added, “If I were to draw a parallel landscape with pharmacy where the companies have to share the data with the corresponding regulator, the latest epharma regulation is in conjugation with the PDP Bill and DISHA guidelines.”

Is it going to adversely affect the epharma startups? Pradeep differs. He said the data sharing with the government will not be a regular phenomenon and it will happen only on a case-to-case basis. The government will be specific about what they need and we will provide only the required information.

He added, “Being an Indian startup we will have to comply with the rules and laws of the land. Hence, under the law, we are more than happy to share the data with the government.”

State Of Indian Epharma Market

According to reports, India is one of the top five countries in the world which search ‘online medicine apps.’ This tells the rising awareness and the future potential of the Indian market.

Currently, while the estimated size of the Indian epharmacy market is reportedly $142 Mn (INR 1000 Cr), just 1% of the traditional Indian pharma market, according to a report — India Epharmacy Market Opportunity Outlook 2024 — today, the E-pharmacy market potential is worth over a billion dollar with more than 30 startups assisting the growth of this segment in various regions of India.

As per the report, India currently has over 850K independent pharmacy retail stores that are able to meet only 60% of the total domestic therapeutic demand. These traditional Brick and Mortal Retail pharmacies are currently responsible for 99% of the pharmaceutical sales annually with online pharmacy contributing to only 1% of the total therapeutic sales.

While the Indian epharma market, growing at a CAGR of 20% is set to hit $3 Bn, by 2024, “the latest regulatory amendment will pave way for the market in the right direction, as it makes the registration simpler, while regulation clearer,” agree Indian epharma startup founders.

Unlike ecommerce, epharma became a subject of interest for Indian startuppers only in the last couple of years. However, as the awareness and clarity in terms of regulation have come now, the sector is attracting huge funds from the investors. Netmeds, 1mg, Pharmaeasy, Medlife, Myra and mChemist are some of the Indian startups currently operating in the epharma space.

Having almost acquired the US-based epharma company PillPack at $1 Bn, the ecommerce behemoth Amazon is now reportedly in talks with an Indian epharma startup Medplus too, to enter the Indian epharma space. With Amazon having a huge user base in  India, this will only accelerate the growth of Indian epharma sector further.

As the existing market is expected to increase by manifold, the startups’ list, funding, M&A to grow by manifold.