India’s e-pharmacy industry under scrutiny as government reconsiders approval

The government is rethinking the approval granted to e-pharmacies, because there are high risks involving patient safety as a result of a “concession race” among players, in addition to data issues regarding medications.
The health ministry “has taken notice of malpractices reported in the sector which lead to concerns over data privacy, sales of medicines without prescription, and predatory pricing,” according to an official cited by the news site.
Amazon, Flipkart, Tata 1MG, and other e-pharmacy firms received show-cause notices from the Drug Controller General of India (DCGI) in February for violating the Drugs and Cosmetics Act 1940 by selling schedule H, H1, and X without a valid licence.
The government is also developing regulations for online pharmacies and has published a draught law for stakeholder input.
The e-pharmacy industry is one that is rapidly expanding. Some of the major competitors in this market include Tata-1mg, Flipkart Health+, Apollo Pharmacy, Amazon Pharmacy, PharmEasy, Amazon, MedPlus, and Reliance Netmeds.
According to a report from Axis Securities dated February 2022, the e-pharmacy industry (including Omni channel and online) experienced a CAGR of 106% from FY15 to FY20, growing to a value of Rs 38 billion.
Given the COVID-driven rise in demand, e-Commerce (Pharmacy) saw strong growth of 50% year over year in FY21, with omni channel sales growing by 71% and online purchases by 48%.
The e-Pharmacy market is anticipated to grow at a CAGR of 42% over FY21–25 to achieve a market size of Rs 230 bn, with online sales growing at a CAGR of 42% over FY21–25 to reach Rs 205 bn and omni channel sales growing at a CAGR of 43% to reach Rs 25 bn.
Tata reportedly invested $220 million to obtain a 55% stake in 1mg, while Reliance reportedly invested Rs 620 crore to gain a majority 60 percent control over NetMeds. Several fund houses, including Abu Dhabi Investment Authority, BlackRock Global Funds, Fidelity, Nomura, Goldman Sachs, Morgan Stanley, HFFC Life Insurance Company, ICICI Prudential Life Insurance Company, and SBI Life Insurance Co Ltd, as well as SBI Mutual Fund  (MF) and Aditya Birla Sun Life MF, helped MedPlus collect Rs 418 crore.
The All India Society of Chemists and Druggists (AIOCD) has complained to the government numerous times about e-pharmacies’ alleged violations of the Drugs and Cosmetics Act.