Corporate bosses at e-pharmacies are hopeful that the Centre will issue regulations in two weeks to resolve the uncertainty in the sector, created by contrary orders from the high courts (HCs) of Delhi and Madras.
On December 20, the Delhi HC extended a ban on the sale of medicines by e-pharmacies till January 8 next year. A Division Bench of the Madras HC on the same day overturned a single-judge Bench order that had banned the online sale of drugs and cosmetics.
“The Madras HC has ordered the central government to issue regulations on e-pharmacies by January 31. The Drug Controller General of India has indicated this could be done in two weeks. So we are positive. Any investor would look at the macro situation for e-pharmacies in India and that remains very good,” said Pradeep Dadha, chief executive officer (CEO) of Netmeds.
He added that there was no drop in sales for December.
“In fact, we believe, the sales in December will be better than in November,” said Dadha, adding that the company would continue to expand, investing in warehouses, digital marketing and technology to increase its reach and cut delivery time.
The CEO said: “At present, we promise next-day delivery in metros. We want to make it quicker.”
Dadha said Netmeds, which directly or indirectly employs 1,000 people, would not cut jobs.
Others said while there was some anxiety after the Delhi HC order, the Madras HC had provided relief.
“There is some comfort after the Madras HC Division Bench order. There is no slowdown and we will continue with investments. Currently, we serve 1,050 cities. We plan to serve 2,000 cities by end-2019,” said Prashant Tandon, CEO and co-founder of 1mg.
He added that along with dispensing medicines, the firm also provided consultation and diagnostic services. “Now, we want to offer Ayurvedic and homoeopathy as well,” said Tandon.
Neither Dadha nor Tandon, however, revealed what their daily sales volume was.
The size of the domestic pharmaceutical market is Rs 1.25 trillion.
E-pharmacies constitute a minuscule portion of it. Their collective sales are estimated to be about Rs 15-20 billion, annually.
Analysts, however, expect the companies to take a cautious approach.
“Legal developments will certainly make investors adopt a cautious approach. With the e-pharmacy rules on the anvil, investors are likely to be in a wait-and-watch mode and obtain clarity before deciding on their next move,” said Atul Pandey, partner of law firm Khaitan & Co.
Pandey said he expected e-pharmacies to approach the Delhi HC with a plea for suspension of its order and to make a parallel petition before the Supreme Court.
“To de-risk their operations, companies must structurally realign their business with the draft e-pharmacy rules as these reflect the thought process of the government in regularising the sector,” he said.
“The current suspension of a single-judge order is a temporary one since appeals by online pharmacies are being heard by the Division Bench. Since the order is not in force, online sales are continuing. The stay on the ban is till the next hearing of the appeal,” said K K Selvan, general secretary of Tamil Nadu Chemists and Druggists Association.
The Drugs and Cosmetics Act 1940 governs the sale of medicines in India. Medicines can be sold from licensed premises only. The act does not cover e-pharmacies at present. In March, the government issued draft regulations on e-pharmacies, making it mandatory for companies selling online to register with the central government. The regulations also provide for data protection and e-pharmacies cannot share customer prescriptions with any third party except the government. The government can ask for patient information for public health purposes. The rules are yet to be notified.
While e-pharmacies have become popular in cities as they offer doorstep delivery and discounts, in the absence of regulations, the model has attracted controversy. One such charge against e-pharmacies is that sale of medicines online is unregulated and hence unsafe. E-pharmacies deny the charges and say the central government will now have an oversight over the companies as registration is mandatory.