The COVID-19 outbreak that has brought the world to a halt is boosting a fledgling industry: telemedicine. As people are mostly confined to their homes and they steer clear of clinics and pharmacies for fear of infection, millions are seeking medicine on the internet. Many big players including Amazon and Jio are eying the pharmacy space.
By Nikunj Sharma
Owing to the pandemic and the enforced lockdown in India, a rise in the online order and purchase of medications and prescriptions have been recorded over the past few months.
In fact, many people, in a bid to exercise safety and self-isolation measures, have reduced buying from the traditional pharmacy stores.
Though e-pharmacy in India is predicted to be one of the booming sectors, it’s the lack of regulations by the government that has often caused anxiety among the stakeholders.
In fact, according to Frost & Sullivan, a Gurgaon-based research and consulting firm, online Pharmacy market in India is projected to reach about US$ 3,657 million (Rs 25,000 crore) by 2022, registering a CAGR of 63% from approximately US$ 512 million (Rs 3500 crore) in 2018.
In general, e-pharmacies offer cost savings that are typically 15-20% more than the brick and mortar retail pharmacies. The discounts are applicable on both antibiotics as well as OTC drugs.
Further, the online pharmacies also provide value-added products and services like appointments for a doctor consultation, e-consultation, e-diagnostic services among others. These services often help e-pharmacy firms to become an end to end healthcare service providers, especially in unprecedented times like these when travel for consultation is a constraint for patients.
Despite a complete ban on the online pharmacies across India, leading e-Pharmacies such as 1mg, Medlife, Medibox, Pharmeasy, etc., witnessed a surge in demand of immunity boosters, medicines for chronic diseases and essential commodities like gloves, masks, sanitisers by over 7 to 8 times than that during regular days.
According to industry experts, the demand during the first phase of lockdown was primarily due to panic buying linked to coronavirus fear. Lockdown rumours further added to the sales of flu, cold and cough medicines since people wanted to keep stock of these medicines irrespective of it being needed by the patient or not.
Additionally, the HCQ demand shot up exponentially as soon as the government released a circular mentioning doctors to have it regularly.
Besides, a disruption in offline pharmacy stores and irregular medical supply chains added to the woes and consumers’ buying patterns. A combined impact of all these factors gave 100% sales growth to some of the e-Pharmacies in India.
“Between April and May, sales have almost doubled than the usual run-rate. However, this growth is not sustainable and it is no surprise to see that pharmacy sales have gone back to normal growth in June,” said Amit Kumar Bajaj, Partner, Grant Thornton India LLP.
“During the lockdown, e-pharmacies contributed more than 10% sales, which, over long-term is expected to be around 20% according to a Frost & Sullivan report,” he said.
Since 2015, online pharmacies are facing stern opposition from conventional pharmacies and trade associations including the All India Organisation of Chemists & Druggists (AIOCD), which represents 8 lakh traditional pharmacy stores across the country.
Also, recent controversy around the promotion of e-Pharmacies on the Arogya Setu app, a mobile application developed by the Government of India to connect essential health services with the masses to fight against COVID-19 and court’s directive on the same further cements the fact.
However, despite the legal and operational challenges, the sector has received considerable investments from Indian and global investors such as Corisol Holdings, Temasek, Sequoia Capital, and Wilson Global Opportunities.
The total investment in the online pharmacy segment stood at USD 300 million in the year 2019, with four leading players that included Netmeds, Pharmeasy, Medlife, and 1mg.
Legal Hurdles
Online pharmacies offer several benefits such as reduced price, convenient home delivery, and a broad range of medicines availability, but some concerns also loom around this model such as sales without prescription, EHR safety, and packaging/ labeling issues.
The Indian market has around 50 online pharmacy players, which provide doorstep deliveries of medicines and medical supplies as the local offline pharmacy stores do. But the regulatory issues linked to the online pharmacy operations are under review by a group of ministers (GoM) led by defence minister Rajnath Singh.
“There is a mechanism through which the online pharma companies can authenticate the prescribed medicine before the sale. However, an act is underway which should provide more guidance on the operations of e-pharmacies. (Association or tie-up with a physical medical store having a license to sell the drugs is an example),” said Amit.
Many sectors witnessed disruption in the past two decades as the Internet has penetrated the basic fabric of every possible business segment including sales and marketing. With growing technology penetration across the strata and geography, online pharmacies will increase its footprints in the days to come, providing a legit platform and fair operative guidelines will be laid by the concerned authorities without hampering the interests of conventional pharmacies on a level playing field.
Putting it from the consumers perspective, Prof. Bejon Kumar Misra – Founder Director Patient, Safety and Access, a Delhi based organisation committed to the safety of prescription drugs and consumer rights added, “The fact that online pharmacies are flourishing in India, establishes the truth that citizens need the service and they are happy to access the services, even though some of the online pharmacies may not be functioning as per the provisions of law. But that’s possible with the off-line pharmacies or also known as Chemist & Druggist stores as well.”
Future Prospects
Consumer preference is paramount and laws should be enacted and amended regularly to uphold the fast-changing consumer demand and expectations.
Today, technology is the best friend of the consumer, which enables them to assert their rights to make an informed choice based on credible information and a transparent supply chain.
In the absence of a clear policy on online pharmacies, the growth of this segment is hampered, while keeping the players and investors on the edge.
Uncertainty looms over the future of this market is also holding back the innovation and expansion of dedicated online pharmacy platforms.
“Law cannot be discriminatory and biased in its implementation and should not compromise on safety and standard. We must notify the rules already framed to protect the consumer’s right to choice applicable to online pharmacies, without any further delay, which is catching dust,” said Prof. Misra.
He further pointed, “Online pharmacies with all the security and standard are a global reality. And, India cannot ignore the change.”
Though no new dedicated players entered the Indian marketplace during the pandemic and subsequent lockdown period, many big players like Amazon and Jio are eying the pharmacy space.
In fact, Amazon had already purchased online pharmacy PillPack in 2018 and now the retail giant is looking to expand its prescription drug delivery business, likely to be called Amazon Pharmacy, to countries like the UK, Canada, and Australia.
At domestic front, Mukesh Ambani-led Reliance Industries is reportedly in talks to acquire majority stakes in Chennai-based online pharmacy Netmeds.
With four established players in this growing space, it would be interesting to see how this marketplace unfolds itself in the days to come.
