At the crossroads: Drug retailing needs new regulatory framework

Rutam Vora | Updated on August 30, 2020

As traditional chemists fight for their space, online players make inroads

The battle in India’s drug retailing sector has never been as fierce and ruthless as it is now. And the stakes are high.

On one side are big corporate monies flowing into tech-driven platforms. And on the other is the traditional dawai wala or the friendly neighbourhood chemist, faced with the prospect of being left behind in a digitally-savvy ecosystem.

Traditional chemists and online pharmacies have, in the past, been involved in a low-intensity stand-off. But all that changed earlier this month, with the entry of corporate behemoths like Amazon and Reliance, the former on its own and the latter by investing ₹620 crore in Netmeds.

Crying foul on these developments is the All India Organisation of Chemists & Druggists (AIOCD), an apex representative body of over 8.5 lakh offline drug retailers in the country. Not only are these fancy platforms for online drug purchases “illegal”, it says, but they also threaten the very existence of the dawai wala. In a letter to Amazon’s global chief Jeff Bezos, AIOCD has said the “e-pharmacies” segment is fraught with legal issues and controversy. In another letter to billionaire Mukesh Ambani, the AIOCD has called for a rethink of its investment.

Flipkart is reportedly waiting in the wings and online players Pharmeasy and Medlife are said to be exploring a merger. All this activity would create a “monopoly in a perfect competition market” of drug retailing, says AIOCD.

Compounders to e-pharmacy

In eight decades, India’s drug retailing has had several makeovers. In the post-World War II era and in the absence of a recognised profession of Pharmacy, drugs were sold by unqualified “compounders”, according to researcher Harikishan Singh in his paper on “Pharmaceutical Society of India (PSI): The oldest Indian Pharmaceutical Organisation”, quoting archives from the Government of Madras.

Singh noted that in 1938, the first pharmacy body — the erstwhile PSI — recommended to the Government of Madras to change ‘compounder’ to ‘pharmacist’ and ‘chemist and druggist’ to ‘pharmaceutical chemist’ to suit legal requirements. The Drugs and Cosmetics (D&C) Act, 1940, became the first national law for pharmacies and the Drugs and Cosmetics Rules, 1945, laid down the rules. Under the Pharmacy Act 1948, the practice of pharmacy was restricted to professional, registered pharmacists.

Today, drug retailing stands at a crucial turning point again, requiring clarity and redefinition on the sale of medicines online, given the Government’s overall digital plans. Presently, “e-pharmacies” tread carefully, calling themselves an “online marketplace for medicines”.

Traditional pharmacists regulated under the D&C Act compete with online competition that is not under the same Act but under the Information Technology Act, 2000, which governs e-commerce and digital applications.

Under the present drug laws, each chemist requires a registered qualified pharmacist who reads prescriptions and dispenses medicines to the patient, says Yogesh Patel, a druggist, and Secretary of Ahmedabad-based drug retailers association. “For e-pharmacies there is no such law, will they ensure same compliance as chemists? Online pharmacies are illegal as there is no law governing them,” he says. "The government supports e-pharmacies and we fear that they will tweak the laws in favour of such companies. There are more than 58 lakh families associated with the drug retailing business in India. If e-pharmacies have their way, then it is feared that 40-50 per cent of chemists will be out of business”. And this amidst the Government’s rhetoric of job creation and becoming self-sufficient, he adds.

Covid’s e-pharmacy booster

On the other side of the divide, experts say that Covid-19 has unlocked business opportunities for the online sale of medicines as people stayed at home fearing the contagion. Average daily orders shot up from 6,500 in pre-Covid times to about 55,000 during the Covid-induced lockdown, according to trade data. Further, e-pharmacy users grew by three times to about 9 million, post-Covid.

Former e-pharmacy representative, Aamit Khanna observes that in about four months, online drug purchases have grown. “This included mostly over-the-counter (OTC) drugs, while there are some prescription drugs also for diabetic care, cardiovascular diseases and dermatology. Teleconsultations have gone up too, helping to push up the sales,” says Khanna. He admits that the D&C Act presently does not cover e-pharmacies but says there is a need to fast-track a new framework for the sale of online medicines. "With technology, there comes accountability too. The current laws have several gaps and the offline players take advantage of it. A large amount of antibiotics is sold through offline stores, unsupervised, without prescription. It is not just the e-pharmacies that need to be governed under the law, the existing druggists also need to be covered for accountability. The current D&C Act is old and outdated as it is no longer relevant to the current industry practice,” he points out.

Published on August 28, 2020

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