How Big Is Online Pharmacies Market And Why Are They In Trouble On February 10, DCGI served a show-cause notice to around 20 online pharmacies including Tata 1mg, Amazon, Flipkart, NetMeds, MediBuddy, Practo, Apollo, Frankross

The Union Health Ministry is planning to take strong action against online pharmacies including the closure of their operations in India. This development comes in the wake of a show-cause notice served a week ago to around 20 online pharmacies including Tata 1mg, Amazon, Flipkart, NetMeds, MediBuddy, Practo, Apollo, Frankross, among others for violation of various sections of the Drugs and Cosmetics Act 1940.

The Drug Controller General of India (DCGI) had asked the online pharmacies to give clarification as to why action should not be taken against them. In the notice, the agency said that the sale or stock or exhibit or offer for sale or distribution of drugs through online, internet or other electronic platforms without a licence have potential impact on quality of drugs and pose risk to public health as there arises a cope of misuse of drugs through self-medication and indiscriminate use of the drugs.

"In view of the above, you are hereby asked to show cause within 02 days from the date of issue of this notice, why action shall not be taken against you for sale, or stock or exhibit or offer for sale or distribution of drugs," said the notice.

The All India Organisation Of Chemists and Druggists has demanded action against these pharmacies and threatened to hold a nationwide strike against them. The organization spoke of a possible monopoly of e- pharmacies in the pharmaceutical market and the ways in which personal data can be misused by them. Confederation of All India Traders (CAIT) has also said that it urged to implement the recommendations of the Group of Ministers constituted under the Chairmanship of Union Defence Minister Rajnath Singh on the issue of selling drugs online about more than two years back. The CAIT has now urged the health ministry to put the recommendation in the public domain.

"It is important to note that in a sector that has such a direct impact on consumer health and safety, it is unimaginable that an unlicensed operator can be permitted to operate without any responsibility. We submit that while use of technology should not be stopped as it has many advantages, sales can only be made by licensed players in compliance with law," said Praveen Khandelwal, secretary general, CAIT.

India's online pharmacies market: An overview

According to Tracxn, there are 7,849 healthtech startups in India. Within that, online pharmacy is one of the successful segments with startups such as PharmEasy, Tata-owned 1mg and Netmeds. Amazon and Flipkart also have their pharmacy businesses. Online pharmacies have also garnered huge rounds of funding. Some of the prominent investors include Sequoia, Tiger Global and B Capital Group.

The sector has however seen only a few mergers and acquisitions. This includes Pharmeasy buying out Thyrocare for $600 million and Tata Digital buying out 1mg for $230 million.

Even though a recession-proof industry, online healthcare reached its inflection only during the pandemic. The sector and the online pharmacies segment in particular got a big push because of the pandemic as people avoided going to chemists even after the lockdowns ended.

After normalcy returned, tele consultations have gone down. However, online pharmacies have achieved habit formation due to the comfort they offer and an overall increase in e-commerce adoption. According to a 2021 KPMG–FICCI report, the online pharmacy market in India is expected to increase at a higher compound annual growth rate (CAGR) of around 40-45 per cent in the future, backed by the growing internet penetration and digital payments and government support. It also said that the online pharmacy market was valued at $344.8 million in 2021 and that the medicine spending in India is expected to grow 9-12 percent over the next five years.