Pharmeasy hit the news earlier this month for becoming the first e-pharmacy unicorn in India. At the same time, over the past few months, we have also been hearing about the digital transformation of the Indian healthcare delivery system. Obviously, these will emerge as the true game changers for the healthcare industry this decade.
We are all aware that e-pharmacies have grown exponentially in the recent few years. More particularly, the online marketplace has seen a complete change in the pandemic year. According to an EY report in 2019, the global e-pharmacy market, then estimated at $69.7 billion, was projected to grow at 17% y-o-y to $244 billion in 2027. India’s share in this market is miniscule with only $9.3 billion in 2019 and expected to go up to $18 billion by 2023 at a CAGR of 18%.
Unlike the western countries, the e-pharmacy market in India is however, unstructured and highly fragmented. Urban consumers have access to retail pharmacies very easily while the rural areas mostly have a friendly neighbourhood chemist shop. Since physical access to medicines and chemists is relatively easy, the need for online services is not strong.
So, under such a scenario, is there a future for e-pharmacies in India?
The number of e-pharmacies in India has grown to about 50 currently, from just a handful about 5 years ago. Today besides Pharmeasy, we have Netmeds, and 1mg who are the major players, and we also hear that Amazon is joining the list soon.
E-pharmacy companies typically connect the individual brick-and-mortar pharmacies and the doctors in various zip codes. The platforms provide SaaS solutions for pharmacies to use in procurement combined with delivery and logistics support, and credit solutions to buy the varied range of medicines from multiple pharmaceutical manufacturers across the country. Thus, the last mile delivery of medicines is highly controlled and organised through this model: it connects millions of patients in the country and provides affordable and quality medicines to their doorsteps. The model relies on registered pharmacists verifying the prescription uploaded by the patient via a smartphone. Once verified, the prescriptions are passed onto partner pharmacies in the area of the patient, and verified again that the prescribed medicines are accurately delivered to the patient. So, in such a model, the substitution of prescriptions is almost negligible.
Several factors contribute to the growth of the online pharmacy segment including – increased smart phone and internet penetration, growing tendency for e-commerce activities and government initiatives towards digitization. However, the main challenges for e-pharmacy in India include - catering to the rural areas due to lack of infrastructure and widespread presence of IoT, immediate supply of emergency medications and the suspicion in the minds of the people regarding the possibility of counterfeit drug supplies. Most importantly, the current regulations in India for e-pharmacy operations are unclear and hence there is constant conflict between the All-India traders’ association and e-pharmacy players.
E-pharmacy players believe that powered by technology, digital healthcare can immensely help improve access, authenticity, affordability and accountability in the Indian healthcare landscape. According to them, the conventional pharma supply chains are not optimised and have several gaps, which cause wastage, delays and risks of sub-standard quality medicines entering the markets. The unstructured nature of the pharma retail sector leads to greater costs for consumers.
It is believed, e-pharmacy model helps with better purchasing margins, better inventory management, increased reach, reduced prices and greater provision of value-added services to the consumers. Innovation and technology being the core of e-pharmacy operations, it results in benefits for the consumers and the entire retail pharmacy value chain in terms of access, quality, choice and awareness, data records, transparency, and data analytics.
The traders argue that e-pharmacy model is highly unethical as the regulations do not permit the sale of prescription drugs without a physical verification of a doctor’s prescription; besides, they operate through giving huge discounts to the end consumer and hence against the rules laid down for the trade margins. They also argue that the online model allows for counterfeit brands to float in the market which is harmful to the consumer.
The regulations for e-pharmacy, drafted by the DCGI way back in 2015, is still in the approval stage; the Government needs to notify the final e-pharmacy rules at the earliest, to unleash the role of technology for improving access and affordability of quality medicines. The delay in the notification of Draft Rules causes unnecessary chaos and anxiety in the market; while progressive regulatory clarity will help all stakeholders including patients, local regulators, and prospective investors.
Given the general shift of the urban Indian population towards purchasing drugs from e-pharmacies over traditional ‘Kirana shop’ chemists, it is high time the Indian lawmakers look to legislate the regulation of e-pharmacies and the online sale of drugs. While there is a necessity to regulate the sale of drugs and e-pharmacies, our lawmakers must also tread carefully to avoid excessive regulation in an industry which is poised for innovation and change.