Death’s door to doorstep delivery, e-pharmacies are here to stay

It was not because we were doing anything illegal, but because the law was ambiguous, Rajpal says. The law in question, the archaic Drugs and Cosmetics Rules, 1945, allowed regulators to crack down on e-pharmacies since they could not monitor whether e-pharmacies were compliant with certain aspects of the law. For instance, it required stamping prescriptions to avoid someone using the same prescription to buy drugs from multiple pharmacies. Similarly, it wasn’t possible to ensure that drugs were handed over to an adult. The risks with e-pharmacies were too many, and regulators in most states decided to crack the whip.

Regulators in Haryana, meanwhile, were considerably more relaxed, giving 1mg a relatively hassle-free existence. This advantage, though, may soon be a relic of the past.

The Indian government is set to level the e-pharmacy playing field, with the health ministry suggesting new regulations that effectively legitimise e-pharmacies. The proposed new regulations will amend the Drugs and Cosmetics Rules, 1945, and recognise e-pharmacies as legal entities. These were circulated among state drug regulators last month. Traditional pharmacists, who were up in arms last year after the government suggested they digitise their supply chain in a public notice on online and offline sale of drugs, stand pacified as well. The proposed regulations no longer make a mention of the controversial suggestion.

Aggressive state regulators and resistance by traditional pharmacists were two key reasons why e-pharmacies have been unable to corner more than 1% of the Indian pharma retail market. Now, with the central regulator in their corner, Tandon hopes they can grow to control 10% of the Rs 1,20,000 crore (~$17.7 billion) market in the next three years. With the dark cloud of regulation clearing, who will emerge as the biggest fish in the e-pharma sea?

Dark days are over

While the new regulations are still only at the draft stage, optimism about the future of e-pharmacies has soared in the last year on the back of the government’s positive overtures. This is evident in VC funding of e-pharmacies, which dipped from $68 million in 2015 to just $24 million in 2016. Since the government began looking into formulating regulations for e-pharmacies early last year, VC funding in the sector surged to $53.3 million in 2017. The draft regulations have only furthered this sentiment.

The process of enacting this amendment does not require parliament’s approval so it could become law before the year ends, said a government official.

Once done, e-pharmacies would have to obtain licenses from the central government, he added. This shifts the responsibility of pharmacy regulation from the states to the Centre and lays out clear expectations for e-pharmacies. These include verifying that prescriptions are genuine, recording patient details and not advertising prescription drugs. While compliance with these regulations will undoubtedly be a challenge, it is a far cry from the wild west environment that has existed thus far.

The proposed regulations are effectively a stamp of approval from all relevant ministries in the government—information technology, home affairs and chemicals. Sure, these regulations aren’t the law, just yet, but it is enough to assure the state drug authorities that, just by definition, e-pharmacies are neither associated with substandard medicines nor the sale of medicines without prescription, says Dr Dhaval Shah, co-founder of Mumbai-based PharmEasy.

Eyes firmly focused on the future, e-pharmacies are now caught in a scramble to acquire customers. Realising the need to be creative while competing with each other as well as brick-and-mortar pharmacies, the different players are taking innovative approaches – both online and offline – to corner the market.

Selling medicines online is more art than science

“They [1mg] had two years advantage and so many downloads, but they could not generate enough business,” said Tushar Kumar, who founded e-pharmacy Medlife in 2014. While 1mg has the most active app users, Medlife has the highest revenue in the sector. He believes that Medlife attained the largest chunk of the e-pharmacy business because it acquired customers via a combination of digital marketing, mass advertising and heavy discounts.

1mg, meanwhile, focused on digital content to drive business. It offers a database of all the brands that sell a drug and at what price. For instance, aspirin is sold by 10 drug manufacturers at prices ranging from Rs 3 to Rs 159. Along with this database, 1mg also publishes articles on healthy living in both Hindi and English to get more people to use the platform.

 

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