E-PHARMACY VS BRICK & MORTAR PHARMACIST – AIOCD PERSPECTIVE

The rapid growth of e-commerce continues to present challenges to the State and Central Governments in the trade of on-line pharmacy. The protests made, when Amazon, Flipkart and Snapdeal, entered in general / retail, are being continued in retail medicine. It has further intensified after Indian Giant Reliance has ventured in the same vertical . More consolidation in this space is expected .

The Central Government continues to lag in passing a specific legislation aimed at the On-line pharmacy industry as of now & thus an online war for the battle of survival continues

E-pharmacies are illegal under the law and continue to operate despite an injunction order passed by the court. As on date, there are no proper rules or regulations for on-line trading of medicines. The State Government has conveniently shirked the responsibility stating that as the Drugs & Cosmetic Act is a central legislation, any addition/deletion/amendment under the provisions of the D & C Act, can be done only by the Central Government.

Public notice way back in March 2011 was issued inviting comments from various stakeholders. The Union of India also seems to have received numerous comments and suggestions from various stakeholders, including the All India Chemists and Druggists Association, wherein, the petitioner association is a member, and the Indian Internet Pharmacies Association. After deliberations on the concerns raised by the stakeholders, the Central Government decided to bring a regulatory framework for the sale of on-line medicines

Notification in August 2018 was issued by the Ministry of Health and Family Welfare, Government of India, publishing the draft rules to amend the D & C Rules, once again calling for objections and suggestions from all the stakeholders to be considered by the Central Government. The comments and suggestions were received and after due deliberations, the draft rules have to be published for finalization in the official Gazette. 

Unless the legislation keeps pace with the technology, the commerce based on technology has to lag behind. While the draft rules are published in the Gazette, they are yet to be notified. Once it is notified, there is bound to be disagreement between law makers, drug companies, on-line traders and finally the consumers. In the absence of any Central or State Government legislation or rules, on-line sale of prescription drugs could hardly be curbed.

While the pros and cons of the on-line pharmacy is debated, the stakeholders and the Central and State Governments are aware of the need for a cohesive system of regulation to be notified regulating on-line drugs trade. 

As the Internet evolved and pervaded into the Country, the retail market had adopted a new technology adding one more medium to reach the consumers. When offering products including food items and other consumables are accepted, the trading of on-line medicine alone is challenged now. With lower price and easy accessibility, the members of the brick and mortar retail chemist/pharmacist feel hurt and threatened.

It is uniformly contended that purchasing the medicines through on-line is physically easier than going to the pharmacies especially for the senior citizens, i.e., the age group that spends most on drugs, the consideration is an important one. The on-line medium offers modern medical care tools and as such, their reminder information about the medicines and also render round the clock assistance. On-line pharmacies allowed the patients to purchase the drugs discreetly without face to face interactions. The rise in on-line pharmacies also creates more supply options for the purchasers to find the best service and price. The above benefits undoubtedly have contributed to the growth of the on-line trading, of-course, without licence. While considering the benefits and advantages in the online trading, there are also several risks which are unique to the online trading.

Disadvantages to a purchaser of on-line.

• Misuse of a prescription, especially in narcotic and psychotropic drugs, schedule X drugs, etc.
• Yet another risk is that the patient may receive the counterfeit drugs, which are sub-standard
•  A patient receives a prescription drug based on on-line questionnaire instead of a valid prescription, which may result in serious side effects and this may be the most common risk without any regulation.
• Lack of physical evaluation.
• The on-line selling of medicines does not require valid prescription, even when selling the prescription drugs.
• The chance of the prescription drugs are delivered without any information to the patients.
• The sale of medicines through Internet intermediaries and the State and Central Governments cannot control the illegal sales.
• Some are related to online buying like missing items, price difference or incorrect pricing, receipt of substitutes or different brand’s medicine, delay or refusal or cancellation of order and/or payment, unresponsive customer care, etc.
• Lack of understanding of the medical history if buying from different online pharmacies
• Lack of cold chain logistic services and moreover, it is exorbitantly expensive for rural areas
• Lack of data security
• Illegal e-pharmacy websites selling contaminated, adulterated or expired medicines
• Unregulated sale of medicines
• Lack of specific governing regulations related to e-pharmacy

In on-line trading of medicine, the requirement imposed on a customer is the prescription of a drug, but it is alleged that on-line pharmacists do not comply with the laws and are selling prescription drugs and controlled substances without valid prescription and they are also offering discounts for bulk purchases of prescription drugs.

 Pharmacies and Retailers have long sought to shield their market from on-line traders of medicines protecting consumers in the process. There are no distinction between legitimate and illegitimate on-line medical store. Intermediaries, who profit from dealing with online pharmacies, have no regulations. It is their broad reach and function, they are able to balance their interests. Another crucial lifeline in Internet commerce is the financial intermediary. They impose their own condition of use. Again, here only a handful of companies dominate the majority of the market.

 The growth of on-line purchase of medicines is encouraged also by the direct exposure to pharmaceutical advertisement. The increased exposure to pharmaceutical products through all modes of communication like Television, Radio, Internet, social media etc coupled with less face to face consultation has given patients a false sense of empowerment. The practice of "self-diagnose" by consumers also drive them to on-line pharmacies. On-line pharmacies provide consumers the ability to compare the price and availability also. While it is time-efficient, it affords more privacy than the brick and mortar pharmacy. 

AIOCD PERSPECTIVE

Rajiv Singhal, General Secretary, AIOCD had  earlier informed that all e-pharmacies are operating illegally and in violation of the provision of Drugs and Cosmetics Act, 1940 and Rules, 1945 framed thereunder. AIOCD has already filed a case against the NITI AAYOG in the Delhi High Court & have been fighting against e-pharmacy entities since long and are in continuous discussion with Central Government, which were kept on hold due to sudden outbreak of pandemic COVID-19. Various High courts have passed an order against Central Government and E-pharmacy operating without a law in place and without a license.

Earlier as quoted by Mr Singhal (General Secretary, AIOCD) Online pharmacies will facilitate easy entry of drug mafias / spurious drugs severely impacting the health and wealth of common man and in particular youth of India. AIOCD also submitted memorandums to Government seeking action against E-Pharmacies. It continues to fight for its 8.5 lacs plus members who will be definitely be impacted with the blossoming of e-pharmacies. January 2019 witnessed a raise your voice programme by AIOCD who on behalf of 8.5 lacs chemists & druggists in India who held a nationwide "HALLA BOL" campaign against e-pharmacy on 8th Jan 2019. Under the campaign --district level associations brought out rallies to hand over memorandum to FDA & Collectors of 719 districts in the country. Same was also carried by state associations who submitted MEMORANDUM to state health ministers and state FDA Authorities.

The All India Organisation of Chemists and Druggist (AIOCD) has opposed the commercial promotion of online pharmacies on the AarogyaSetu App. It has also written a letter to PM objecting Niti Aayog’s move to allow e-pharmacies to be promoted through the government’s application.The AarogyaSetu App platform listed four e-pharmacies – 1MG, PharmEasy, NetMeds and MedLife.

AIOCD’s main contention has been internet pharmacies and the illusion that e-pharmacies are reaching out to customers at their homes. AIOCD also complained against a link on the AAROGYA SETU application, www.aarogyasetumitr.in, a website affiliated to the Central Government and AAROGYA SETU application. The AIOCD has appealed to Prime Minister & other concerned Ministries / top bureaucrats to delink the e-pharmacy marketing app, and resume a meeting with AIOCD to discuss the agenda of sale of medicines on the Internet after the COVID-19 pandemic lockdown.

The government later in June 2020 suspended the AarogyaSetu Mitr portal, which is linked to the Aarogya Setu app to promote online sale of medicines, following objections by nearly 8.5 lakh brick-and-mortar retail chemists across India. The petitioner had termed the move to link the portal with the Aarogya Setu app as illegal, arbitrary and discriminatory because it served as a marketing tool for e-pharmacies only and excluded marketing, distribution and sales by the offline chemists.

Online pharmacies are facilitating easy entry of drug mafias / spurious drugs severely impacting the health and wealth of common man and in particular youth of India. Online portals cannot sell narcotic drugs, tranquillisers and Schedule X drugs, and cannot advertise their services, as under the Drugs and Cosmetics Act. Under the new rules, complete information on the medicines will have to be provided by the e-pharmacy holders, and a 24/7 helpline should be made available. The attraction of the online pharmacy, for many, is the fancy discounts that are available, up to 60%, besides free home delivery and sometimes, other value-added services.

AIOCD has been vehemently opposing entry of giants Reliance, Amazon and Flipcart and have written to respective companies and to PMO. Their contention are that traditional formats will always have the advantage of knowing customer personally and will always be emotionally well connected. This piece will and can never be served by online pharmacy. Traditional pharmacy are closer to the proximity of customers and hence they will remain customer’s first choice when it comes to acute medicines

Research and Markets estimates that the e-pharmacy market potential is very high with giants like Reliance,Amazon, Flipkart, and more than 30 start-ups trying to grab a slice of the pie. The e-platform is led by Medlife, Netmeds, 1MG, PharmEasy, Myra, CareOnGo and Pharmasafe.

So, there will be push for early publication of rules to help regulate e-medicines market & online pharmacies considering legal recourse against ban.

What is likely to happen is an appeal against the verdict.

The legal process will take its course and the affected companies will come together to make sure that on line model is understood well and the court clarifies the order.

E-pharmacy is not only competing with traditional pharmacies but also with the government-operated Jan Aushadi Kendra, which is a new initiative by the government, this offers discounted drugs and medicines. The market has a huge potential due to its model of access to medicines much faster, core convenience and real savings for consumers. The sector is lucrative for investors, who have fueled $900 Mn during 2018 and 2019 in online pharmacies (Source: venture intelligence). Though brick and mortar stores will retain its dominant position, synergy should emerge with the right ecosystem, suitable and propitious policies with the desired scale of investments. It is believed that once the specific regulation will be finalized, there will be more and more online players in this untapped market with immense potential in the future. Amidst this, consumers will always be more important than online or offline pharma retailers when it comes to drugs.

Currently, there are no specific regulations governing e-pharmacies in India and this is a major growth inhibitor for the online pharmacy market in India. All online pharmacies are operating as per the Drugs and Cosmetics Act, 1940 (D&C Act); Drugs and Cosmetics Rule, 1945 (D&C Rule); Pharmacy Act, 1948; and Information Technology Act, 2000 (IT Act). The Union Health Ministry in August 2018 came out with draft rules on the sale of drugs by e-pharmacies to regulate the online sale of drugs and patients’ accessibility to genuine drugs from authentic online websites. However, this draft is still awaiting formalization and finalization.

***********************************************************************

.FUTURE OUTLOOK

With robust CAGR of 63%, buoyed by an increased access of medicines to a majority of under-served population, long term drug compliance for chronic conditions, and rising internet penetration some estimates put the total number of online pharmacies at 250, with at least 50-60 of them termed as large players. Online sale of medicines could account for 15-20% of total pharma sales over the next 10 years — due to multiple factors including ‘Digital India’, e-healthcare initiatives, increasing health insurance, and schemes like Ayushman Bharat — says a report by Frost & Sullivan.

According to another report by IBEF, the Indian retail pharmaceutical sector is estimated to reach $59 Bn (2023) from $25 Bn (2017), growing at a CAGR of 15% (2018-23). For all domestic consumptions, Indian retail pharmacies are the dominant distribution channel with more than 85% share of the overall pharmaceutical sales in India. Retail pharmacy refers to retail channels which sell prescription and over the counter drugs along with FMCG products as well as certain generic testing services such as blood testing, sugar testing, etc.

Like manufacturers, retail pharmacy market is also highly fragmented in India which currently has over 850,000 offline pharmacy retail stores with no dominant retail chain in terms of the market share. According to the Research and Markets, these traditional brick and mortar retail pharmacies are currently responsible for ~99% of the pharmaceutical sales, while online pharmacy or e-pharmacy contributes ~1% of the total therapeutic sales but according to NetMeds, the e-pharmacy presently accounts for ~1.5-2% of the total pharma sale and by looking at the rapid growth that the industry is seeing today the penetration level can go to over 10% by 2023

In recent years around 250 online pharmacies have sprung up in the country. According to Frost & Sullivan, the e-pharmacy market in India is estimated to grow at an exponential CAGR of 63% and reach $3.6 bn by 2022 from the current $512 million market (2018).

Source: Secondary Research & Articles /blogs and AIOCD bulletins/news 

Proven proficiency in Pharmaceutical Consulting: Consulting assignment & business development, strategic planning & marketing across various sectors of Indian industry.

{Reach at [email protected]}