How The Evolving Regulatory Landscape Is Shaping The Future Of E-Pharmacy In India

The Indian technology infrastructure has become a source of discussion and study globally, given the strides made by UPI and Jan Dhan-Aadhar-Mobile (JAM) trinity in recent years. The impetus for increased digitisation has been fuelled by the government’s push towards digitalisation, which is, in turn, supported by the growing accessibility and affordability of internet services.

The major thrust for this came about during the pandemic when it was no longer optional for businesses to be tech-enabled but was needed for survival. From SaaS to ecommerce, all sectors saw exponential growth, given the restrictions posed by the pandemic-induced lockdown and people’s apprehension to go out.  In addition, the need for essentials during the pandemic compelled people to explore options for remote shopping, which in turn led to the wider adoption of ecommerce and online options, even in tier 3 and tier 4 cities which ordinarily would not have happened so soon.

One such sector with huge potential is online pharmacy services. The online pharmacy services space had found few takers post-pandemic. The sudden outbreak of the pandemic made it imperative for people, especially older people and medically unfit, to have access to healthcare services and medication from the comfort of their homes. As a result, the demand for medicines increased significantly, and online/remote pharmacy services emerged as a critical means to fill the gap in last-mile deliveries with easier accessibility and safety. During the lockdown, nearly 8.8 Mn households used home delivery services. 

It opened a bigger stream of business for offline licensed pharmacists beyond their immediate locales as they could reach more customers with valid prescriptions. To this end, the usage of ecommerce as a delivery option helped many consumers and licensed pharmacists. The interest and acceptance of the online pharmacy services space have only increased since then-propelled further by the innovation of several startups and companies that have come up in the space. 

Should Banning E-Pharmacy Even Be An Option?

Online pharmacy services have distinguished themselves by sourcing all medicines from the same licensed sellers and adhering to strict transportation standards, as required by the licenses issued to the pharmacists who sell on their platforms. Though the business of e-pharmacy is a favourable one, it is challenged by regulatory issues in India. The question of the legality of online pharmacies has arisen every now and then with respect to the sale of medicines online. 

Recently, the Drug Controller General of India (DCGI) issued a show cause notice to more than 20 top Indian e-pharmacy companies, including Tata-1mg, Flipkart, Apollo, PharmEasy, Amazon and Reliance Netmeds, for selling medicine online. The cause of this action was probably driven after the All India Organisation of Chemists and Druggists (AIOCD), an apex body of approximately 12 Lakh offline pharmacists sent an advanced notice to launch a nationwide agitation if the government didn’t act. But banning is not the solution, and it makes sense to examine the problems on merit and convenience. 

Furthermore, restricting/banning e-pharmacies can disrupt the growth of the pharmacy sector in the country, stifle innovation and may as well impact easy access to medicines that consumers enjoy today. However, the need for robust regulations and efforts is imperative to combat the misuse of drugs and prescriptions, illegal e-pharmacies, and storage and transportation. Apart from this, since online pharmacies store customers’ medical data, there should be a privacy policy in place to ensure that customers’ information remains private and secure.    

Back in 2018, the Ministry of Health and Family Welfare floated the draft e-pharmacy rules to regulate the operations of online pharmacies. After taking public comments, these rules were finalised and were taken into consideration but later were shoved. Now, the proposed New Drugs, Medical Devices and Cosmetic Bill 2022, if passed, will bring online pharmacies under its ambit and will mandate them to have a license to continue operating. They will also not be allowed to sell medical devices without a license.

Online-Offline Collaboration To Boost The Sector

The growth of e-pharmacy in India has been significant in recent years. India’s e-pharmacy market was pegged at INR 26 Bn in 2021. It is expected to reach around INR 90 Bn in 2027 with a CAGR of 22%, backed by the growing internet penetration and digital payment ecosystem and government support. There has been a significant increase (approximately fourfold) in foreign direct investments (FDI) over the last five years in the Indian pharmaceutical industry. 

The market has seen several startups, top ecommerce companies, and conventional brick-and-mortar stores enter due to its tremendous growth potential. However, patients still prefer their neighbourhood stores for acute care and emergency. This calls for a collaborative approach wherein online pharmacy players are opening capital-intensive brick-mortar stores. As per industry sources, Apollo Pharmacy has more than 4,000 physical stores, which also cater to their online sales. Similarly, home-grown healthcare startup PharmEasy has around 600 offline stores, whereas Tata-1Mg has over 50 stores. 

Furthermore, the digital-enabled collaboration between online and offline pharmacies will be the way forward to provide the best customer-patient experience. Such is the only way to co-drive value for consumers. For instance, tie-ups with local pharmacies could offer last-mile delivery by allowing offline vendors to expand their bases. Such a model will also provide consumers with easier access to both online and offline pharmacies to choose from based on their requirements, availability and price. 

What’s Next?

Given that there is a lack of clear-cut regulation in the country around online pharmacy services, most of these fall under the ambit of regulations that govern the offline space. This might not be enough, given that regulations change from state to state and lack cohesiveness, leading to a trust deficit among regulators for the players in the space. This can be mitigated by collaborating with companies that provide online pharmacy services, as they understand the challenges of the real world. 

The sector now has country-wide acceptance from the public, and it is clear that it is here to stay. The government should enable this by working on a robust policy and providing unambiguous regulations to create a friendly environment for existing online pharmacy service players. This provision will encourage more entrepreneurs to enter the sector and contribute to the general development of the online pharmacy services market in India, thus enhancing the overall health sector of the country.