In the last week, India’s online pharmacy market saw two significant merger and acquisition deals. This has suddenly caused activity in a sector from which large investors have shied away due to lack of proper regulations.

Try this easy question:

Q. Discuss the prospects and benefits of online pharmacy in India. (150W)

How is the pharmacy market in India currently shaped?

• Unlike the US, where the top three pharmaceutical distributors have a 90 per cent share in the market, India’s is a fragmented market with over 8 lakh pharmacies.
• This gives online pharmacies an opportunity to capture their space without opposing large traditional retailers.
• Currently, companies in the Indian e-pharmacy space mainly operate three business models — marketplace, inventory-led hybrid (offline/online) and franchise-led hybrid (offline/online) — depending on the way the supply chain is structured.

Rules governing the pharma sector

• Work on regulations specifically for e-pharmacies has been in progress for several years now.
• In the absence of clear regulations, online pharmacies currently operate as marketplaces and cater to patients as a platform for ordering medicines from sellers that adhere to the Drugs and Cosmetics Act and Rules of India.
• Other regulations, like the Information Technology Act and the Narcotic Drugs and Psychotropic Substances Act, also apply.

What do the draft e-pharmacy regulations propose?

• Draft rules for e-pharmacies sought to define the online sale of medicines, what an e-prescription means and what type of licences online firms would need to get from regulators to operate.
• The draft had proposed to allow e-pharmacies to get a central licence to operate from the country’s apex drug regulator, which could be used to allow it to operate across the country.
• It also proposed to define e-pharmacies in a way that would allow them to distribute, sell and stock medicines.
• The proposed regulations prevent them from selling habit-forming drugs like cough syrups specified in Schedule X of the Indian drug regulations.

Current status

• Regulations for online pharmacy players have been in the works since 2016 but are yet to come out.
• The last attempt to clear these regulations saw the draft rules being pushed through two expert committees under the Central Drugs Standard Control Organisation–India’s apex drug regulatory body–in June 2019.

Online pharma is growing in scale

• While Covid-19 and the subsequent behavioural shift towards e-commerce may have catalyzed growth for online pharmacies, the sector was already poised to grow seven-fold by 2023 to $2.7 billion.
• This was mainly on account of the challenges faced by physical pharmacies that gave their online counterparts a problem to solve.
• Experts believe that e-pharmacies will be able to solve the problems that traditional pharmacies couldn’t.
• But for this, they need to have a large-scale presence that calls for either huge investments or consolidation.

Conclusion

• The e-pharmacy sector holds immense potential to address the persisting issue of affordability and accessibility of medicines in India.
• Steps should be taken to foster the e-pharmacy sector with sufficient safeguards and under regulatory control to protect the interest of the consumers.

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