Pulse

E-store concept gives retail pharma the shivers

Rutam Vora | Updated on May 11, 2018

With the government looking to recognise e-pharmacies, offline players see margin erosion

Pankaj Jani* is a chemist in Ambawadi, Ahmedabad. And he has been one for over 25 years. But the times are a-changing. So are the preferences of customers who may choose to order medicines over the internet, rather than visit his store.

“It is going to be a tough time ahead,” says Jani, referring to the Health Ministry’s recent draft notification that seeks to recognise and legitimise online or e-pharmacies.

Jani’s pharmacy stores ₹25 lakh worth of medicines and has an average daily turnover of up to ₹80,000. But his margins on sale of prescribed drugs are thin.

The online sale of drugs will not just impact business but also disrupt drug pricing, says Jani. “Because of their large volumes, online retailers can bargain with manufacturers and offer heavy discounts on the drugs. We have limitations, we operate on wafer-thin margins,” he explains.

Nervousness grips both online and offline drug retailers, as change seems imminent. While the old-world chemists are threatened by the slow but sure emergence of e-pharmacies, the online players apprehend regulatory uncertainty. The final shape and structure of the proposed new rules will determine their future. And yet, e-pharmacies now cherish a dream. While they were labelled “illegal” in the past, the draft rules define them as a business of distribution, selling, stocking, exhibiting or offering drugs for sale through a web portal or any other electronic mode.

Security concerns

Though the proposed rules allow online sale of medicines only through licensed and registered e-pharmacies, concerns abound on whether e-pharmacies could encourage more self-medication, even involving prescription drugs. There’s also the worry about how safe patient data would be with online operators.

Sameer Sah, Associate Partner at Khaitan & Co, says that the responsibility currently lies with the chemist who is required to verify the prescription and mark it to prevent its misuse. “As the new draft rules don’t address delivery, it isn’t entirely clear how prescriptions will be marked,” he says. Patient data concerns are covered under existing laws and the draft reinforces that such information be kept “sacrosanct,” he adds.

Early mover Zigy.com, promoted by Phaneesh Murthy-backed PM Health & Life Care Pvt Ltd, has a two-layer pharmacist check for verification of the prescription to avoid misuse. “The objective is to avoid substitution or self-medication of the prescribed medicines so the right medicines are sent to the customer. We are stopping the substitution, which is normally done at the offline stores,” says Hemant Kumar Bhardwaj, Co-founder of Zigy.com.

But the drag for e-pharmacies is the time lag in getting medicines to patients. And there the offline chemist stores still rule.

Trust and proximity are advantageous features for physical retail outlets, says Ahmedabad-based Rameshbhai Thakkar*. “A patient can visit the store and replace the medicines, he can return the excess ones...Such convenience won’t be available with e-pharmacies,” says Thakkar, adding that he will oppose the online retailing of drugs. Jani points out that a regular chemist will be able to call out a customer who is not genuine and who buys cough syrup, for example, for sedation purposes, a check that e-pharmacies cannot make.

Physical stores do not face extinction as not everyone has a smartphone or internet access and is comfortable using it, says Dr Prakash Shah, member of the Gujarat State Pharmacy Council. “But if they want to be in tune with changing times, the legal framework of e-pharmacy will also create opportunity for physical stores to have their own e-pharmacy.”

E-competition

Riding on the digital bandwagon, e-pharmacies face close competition from aggregators, who use a mix of technology and physical retail to benefit patients and who are possibly outside the ambit of the proposed law. Jaipur-based app MeraPatient allows users to search for nearby chemist shops and diagnostic centres and compare prices by uploading the doctors’ prescription on the app.

Manish Mehta, founder, MeraPatient, says e-pharmacies supply medicines between 24 hours and two days. Delivery needs to be quick.

“It is better to use technology to aggregate the offline pharmacies for better reach to patients,” says Mehta, whose app, with 10,000 users and counting, illustrates changing times in drug retailing.

*Names changed to protect privacy

Published on May 11, 2018

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