The recently released draft guidelines for the online pharmacyindustry have raised several questions for players operating in the burgeoning space, including on a possible overlapping role of state governments.
The gazette notification, released on August 28, states that all e-pharmacies have to register with the Central Drugs Standard Control Organisation, the apex drug regulator and central licensing authority.
But the rules also give state governments the power to cancel registrations, leading to fears of over-regulation in a space that has emerged as a sunrise sector over the last three years.
“While the draft rules clearly mention a central licensing authority, as far as e-pharmacy marketplaces are concerned, there is also Rule 67T (3), which talks about the power of the state governments to cancel the registrations. The confusion lies around the question of where this power is coming from,” said Atul Pandey, partner at law firm Khaitan & Co.
Additionally, it is yet unclear if offline pharmacy retailers selling on online platforms will also have to register with the central licensing authority, and if online platforms have to register with the states as well.
“There is also a requirement under existing rules for each and every drug, retailers and wholesalers to obtain license from the state authorities. It is not clear if the online portals will have to register with the state authorities in relation with the drugs sold through the portal,” Pandey said.
“What is still not fully clear are issues around data privacy. We are still waiting to understand what that means in some level of granularity, but that should be covered under the data privacy conversations, which are already actively on,” said Tandon, who also heads the India Internet Pharmacy Association.
Tandon, however, shot down concerns relating to over-regulating the nascent space.
“Regulations in this sector are much more poorly enforced than it needs to be. Pharmacy is a sector that deserves better compliance than it has today… We are anyway operating with high standards of compliance,” he said.
India’s pharmaceutical sector was valued at $33 billion in 2017, according to the India Brand Equity Foundation. It is expected to expand at a CAGR of 22.4% over 2015–20 to reach $55 billion. The country is expected to be among the top three pharmaceutical markets by incremental growth and the sixth largest market globally in absolute size by 2020.
The domestic e-pharmacy market has captured less than 1% of the overall pharmaceutical market but is projected to touch $3 billion by 2024, according to Kuick Research. “If you look at India’s growth, the two most important aspects are improving accessibility to healthcare and improving affordability… Ecommerce can play a strong role in bridging that,” said Pradeep Dadha, chief executive of online pharmacy NetMeds.