Economy

It’s battle time for pharmacy stores and their e-commerce peers

PT Jyothi Datta Mumbai | Updated on August 19, 2020

Amazon, Reliance entry signals consolidation in online pharmacy space

In less than a week, the online pharmacy space has seen the entry of two heavyweights — Amazon and Reliance — in a testimony to the potential this fledgling segment holds.

Close to the stroke of the midnight hour on Tuesday, Reliance Industries Ltd (RIL) said it was investing ₹620 crore in Chennai-based Netmeds, a venture that defines itself as an “e-marketplace for pharmaceuticals”. The announcement set the wires afire as it was seen as a classic chess-board move to counter multinational e-commerce giant Amazon that had, a day ahead of Independence Day, announced Amazon Pharmacy to sell over-the-counter and prescription medicine.

 

In a less visible development, possibly prompted by overtures like these, two other online players — Pharmeasy and Medlife — have reportedly approached the Competition Commission of India with a proposal to merge. The promoters are not commenting yet.

The backdrop to this clash of giants is an ongoing battle already underway between online pharmacies and traditional offline chemists.

Legal issues

In fact, following Amazon Pharmacy’s announcement, the All India Organisation of Chemists and Druggists (AIOCD) wrote to Amazon’s global CEO Jeff Bezos and India head Amit Agarwal, highlighting some legal issues. “This space (e-pharmacies) has been marred by extreme controversies, court cases and legal issues in the last few years,” the AIOCD letter said, calling online pharmacies “illegal” as they were not recognised under the Drugs and Cosmetics Act and Rules.

 

“The sale and dispensation of medicines in India is covered under the Drugs & Cosmetics Act 1940 and Rules 1945. The above said Act regulates the import, manufacture and distribution of drugs whereas the rules contain classification of drugs and guidelines for storage, display, sale and prescription of each schedule,” the letter said.

Pointing to critical issues like the need for a doctor’s prescription and ‘dispensation’, the letter said: “A prescription, in original, is required for every ‘prescription drug’ being sold. The rules also specify that the prescription for certain drugs needs to be endorsed during the sale. Further, the dispensation has to take place from a licensed premise, for which the licence has been issued by the competent authority. This being the case, the sale of prescription drugs and medicines through an online medium is illegal,” said the letter from AIOCD, which represents over 8.5 lakh members.

Other online concerns raised by the chemist association in the past include the possible misuse of antibiotics, psychiatric medicines and cough syrups, among others.

Online players’ defence

Representatives of online platforms have clarified that they act as “facilitators” or “lead generators” and do not make or store medicines. They only link up with licensed chemists, they said, adding that online sales required legitimate prescriptions that are traceable.

The estimated ₹3,000-odd crore online pharma marketplace segment has players such as 1mg, and large drug companies are said to be interested in buying into them. Netmeds, for example, is backed by Dadha Pharmaceutical, the promoter family of which has a pharma experience that’s said to date back to a century. It first ventured into the pharmaceutical retailing business and drug manufacturing in 1972.

For Reliance, industry-watchers point out, Isha Ambani is married into the Piramal family, which has also recently strengthened its pharma presence. E-commerce players like Flipkart are also reportedly keen on the space.

The stand-off between online and offline players will continue until the Centre steps in, to possibly accommodate both formats on an equal footing. That could be a way forward, say industry-watchers, given the government’s ambition to take healthcare digital.

Published on August 19, 2020

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