Pharma Association Warns Pharmallama, Shark Tank Investors Of Legal Action For Flouting Norms

Days after epharmacy Pharmallama received funding from multiple investors on TV show Shark Tank India, an association of pharmaceutical distributors has warned the startup and all investors of legal consequences.

In a letter addressed to the founders of the startup and the Health Ministry, Delhi-based South Chemists and Distributors Association (SCDA) alleged that Pharmallama’s operations are illegal and should be immediately shut down in public interest.

“By this letter, we are advising you against this misadventure of endangering the health of our citizens and operating against the laws of our country by shutting down the current operations of your company Pharmallama, failing which we will have to take legal remedy in the Honorable High Courts of our country,” stated the letter.

The SCDA, in its letter, claimed that running an epharmacy is against Indian laws. Besides, ‘no rule’ has yet been formulated in the country that allows repacking of medicines.

Founded in 2020 by Deepesh Rajpal, Achintya Dayal and Arjun Raghunandan, Pharmallama operates a ‘full-servicing pharmacy and comprehensive medication management platform’ that dispatches medication to users in pre-sorted sachets. Each of the sachets is printed with dosage and timing of the medication to simplify management of medicines. 

The startup recently bagged an investment of INR 2 Cr for 5% equity from all five sharks – Anupam Mittal, Aman Gupta,Namita Thapar, Peyush Bansal and Amit Jain – on the reality show. Now, all five sharks are facing heat from the association which has threatened to launch a legal case against the company, the investors and another supposed investor, Flipkart. 

“… there is NO RULE under which repacking of medicines without original container/packing is allowed, dose wise or otherwise under the Drugs & Cosmetics Act and will amount to the drugs being misbranded, adulterated or spurious,” the SCDA alleged. 

The letter further noted, “Repacking the medicines is literally endangering the lives of our citizens as it can amount to contamination with filth, exposure to insanitary conditions, presence of toxins and harmful substance(s), reduced quality of strength which may render it injurious to health.”

The association also said that Pharmallama is repacking drugs without obtaining any licence from any government authority. The trader body also said that Pharmallallma is operating in contraventions of multiple provisions of Drugs & Cosmetics Act 1940, Drugs & Cosmetics Rules 1945, as well as the Pharmacy Practice Regulation.

The development comes weeks after it was widely reported that ecommerce behemoth Flipkart is in advanced stage of talks to acquihire the Bengaluru-based online pharmacy.

Epharmacies Walking A Tightrope

Some aspects of the online pharmacies in India are currently regulated under the IT Act, 2000. However, there are no specific laws that govern the burgeoning space. 

In a bid to crack the whip on mushrooming illicit trade of medicines online as well as controlled substances, the government released the New Drugs, Medical Devices and Cosmetics Bill, 2022 in July last year to replace the existing Drugs and Cosmetics Act 1940.

The draft Bill will govern epharmacies in the country and also envisages a licensing regime for such players to continue their operations. 

Earlier last month, the Central Drugs Standard Control Organisation (CDSCO) reportedly issued show-cause notices to more than 20 online pharmacies including Amazon, Flipkart, Tata 1mg, Practo, Netmeds, among others, for flouting drug-related norms. 

Prior to that, the Drugs Controller General of India (DCGI) also sent show-cause notices to ecommerce players for illegal sale of drugs online.

Despite the hiccups, the homegrown digital pharmacy market continues to grow and is projected to reach a market size of INR 8,947 Cr by 2027.