E-pharmacies: Waging a Battle for Survival

Across the globe, e-commerce entities have grown significantly over the last few years. E-pharmacies too have grown as a result of increasing incidence of chronic diseases, growing tech savviness, increasing demand for convenience, etc. Moreover, the significant discount provided by these entities are also a big lure. Till 2015, getting quality medicines at discounted rates was a dream, but, with the entry of online pharmacies in the Indian marketplace it has become a reality. However, its entry had significant impact on offline players’ business and it was strongly opposed by them. And several times, the apex body of chemists association The All India Organisation of Chemists and Druggists (AIOCD) had called up nationwide strikes against online pharmacies. The war between online and offline pharmacies have been ongoing for some time and both have tried their best to turn the policy makers and regulators in their favour. In a recent development, the ongoing tussle between online pharmacies and offline pharmacies took a different route when Chennai-based Tamil Nadu Chemists & Druggists Association filed a plea to block links of websites selling medicines online. Their concern was that these sites may sell fake, expired, contaminated, unapproved drugs or otherwise unsafe products that are dangerous to patients and which might put a patient’s health at risk. This led to an interim ban on online pharmacies operating without a license. It has given rise to another dilemma — Are online pharmacies just mediators or full-fledged pharmacy stores? In the midst of all these happenings, industry experts share their views on the recent developments and offer insights on the way forward for online pharmacies. By Usha Sharma

e-Pharmacy – A consumer perspective-Anil Khanna, Partner, Wisdomsmith Advisors

There is a popular Chinese proverb, which goes as follows – “It is easy to get a thousand prescriptions, but hard to get one single remedy.”

This seems to be so true for the Indian e-pharmacy market, and all the debate centred around it. With all kind of expert opinions being propagated, and what’s the best way forward, what everyone seems to be missing one crucial point – “what does consumers want?”, “are consumers absolutely gung-ho about e-pharmacies?” Are they going to junk their neighbourhood chemists overnight, and walk into the waiting arms of the e-pharmacies, all lock-stock and barrel?

Both offline and online pharmacies keep fighting and arguing among themselves, without a bother for the end consumer. Latest example being a judgement by Madras High Court, ordering interim ban on sale of medicines by online pharmacies, based on a petition by Tamil Nadu Chemists & Druggists Association (TNCDA). And the usual reason given was ‘online pharmacies may sale fake medicines, which could be harmful for the patients’! Though in reality TNCDA concern was not at all about consumers, but rather, it was only concerned about its member chemists, and their business. It can also be argued, even the judge who gave the order was also not fully concerned about the consumers, for if he was, he would have asked few penetrating questions on fake medicines being sold through offline chemists also. But he didn’t!

In this disproportionate focus on e-pharmacy regulation, AIOCD opposition to it, chemists strike, one person, who is the most critical in the entire scheme of things, is seldom mentioned – Consumer. This is actually the reality, and hence the tragedy, of any discussion related to pharma / healthcare industry. While everyone pushes their point-of-view in the garb of ‘representing consumer benefit’, what they essentially pushing is their own agenda. So is the case with e-pharmacy related debate Just a small mickey-mouse, random check in your neighbourhood (large metro city, and cosmopolitan) will reveal a sobering truth. First port-of-call for medicine is the corner pharmacy, almost always. Why only medicine? In large number of cases, even for medical advice. You probe further, with sufficient nudge towards e-pharmacies, all that one hears – “yaah! They provide big discounts!” With no spontaneous recall of any single e-pharmacy brand, even ‘aided recall’ is also very low.
This despite the fact that large amount of dollar has been spent by e-pharmacies in TV campaigns – be it Netmed’s – India Ka Khayal Rakhe, India Ki Pharmacy! Or Medlife’s – LafadduMatBano campaigns. They just talk about the discount What does it reveal? The answer is one small, though very critical fact – consumer focus or lack of it.

In the summer of 2017, Google launched a TV ad titled ‘Pharmacy Near Me’. The ad focused on their app which helps in immediately pulling up the nearest pharmacy listed, with contact details and ends with the home delivery of something as simple as bandages. Google won’t do anything just for the fun. Whatever, their plans may be, but they got fundamental consumer truth, absolutely bang-on.  That neighbourhood pharmacy matters.

That even after being in operation for nearly 5 years, combined gross sales of e-pharmacies is just about Rs. 1,000 crores! That too, with discounts being offered ranging from 20-50%. The reason is simple – in India for large number of people, a chemist not only dispenses medicines, but he also dispenses medical advice. In a large-scale chemist’s survey conducted by the author sometime back, it was revealed that more than 35% consumers come to a chemist with their symptoms and seek his advice on the medication. So, a visit to a neighbourhood chemist, helps consumer also save on doctor’s fee.

Another important reason is the trust. Since an online pharmacy is a distant entity, consumers don’t know who is the face behind them – an important consideration, especially when it comes to healthcare (including medicine). Consumers, if a survey is done, may overtly say that they would like to buy medicine online, but the reality is there is a certain degree of comfort with physical chemists. In fact, in a very recent chemist conversations, we figured out that outside of Mumbai / Bangalore, in any other metro, there was hardly any impact of online pharmacies on the sale of offline chemists.

Another reason for low online medicine sales is that, out of 280+ e-pharmacies operating in India, most, may be around 90% are operating illegally, or may be violating law of the land flagrantly. That’s a different problem altogether, for which both the law as well as its implementation needs to be strengthened. So, while, experts will focus on law should have such and such provisions, it should lead to ease of business and so and so forth. But ultimately, what matters is ‘what consumer wants?

Online pharmacies need to evolve With GoI releasing draft guidelines for e-pharmacies and seeking stakeholders’ feedback, regulation for the online pharmacies will eventually fall in place in near future. While clarity on the regulation would be quite desirable and will remove ambiguity, ultimately e-pharmacies would need to become customer centric. They will have to move beyond focusing only on discounts.

Going forward, multi-format pharmacy groupings will be the future. They will create brands, which are meaningful to consumers, leverage marketing clout, generate multi-channel shopping experiences through e-commerce, home delivery and loyalty schemes linked to store cards and mobile technology applications – m-commerce. Such multi-format chains will exert buyer power on a national/regional basis to maximise market share forcing further consolidation in the supply chain to match the demands of pharmacy groups in terms of prices, cost of goods, promotional spend and services. There could be segmentation, with some focused on discounts and other targeting premium opportunities (in Russia major chains run two brands). This will inevitably lead to creation of ‘private label’ pharma brands. So, what’s that one remedy, instead of thousands of prescriptions? – Consumer Connect. And consumers want the flexibility of both online and offline worlds. This is a space that’s been crying out for consumer focused rationalisation. Alas, no online player is focused on it.

Taking the tech route to improve healthcare – Pradeep Dadha, Founder and CEO, Netmeds.com

We were pleased with the outcome of the recent hearing at the Madras High Court, which reiterated its earlier observation on Nov 1, 2018, that it will not restrain licensed online pharmacies from selling medicines through their platforms. As a fully licensed pharmacy, Netmeds.com is committed to adhering to all the guidelines and rules under the D&C act.

It’s often said, “all good things come to those who wait,” and it seems now that a very good thing may be coming to those of us, both businesses and consumers alike, who have for more than three years awaited clarity on the status of online pharmacies.  Although not finalised, all indications are pointing toward a positive outcome and the ratification of the recently released Draft Rules that will once and for all legitimise and regulate online pharmacies. For many of us, this landmark event will signal both the successful culmination of a hard-fought battle as well as the beginning of a new chapter in the ever-evolving history of our company and the online pharma industry. Founding Netmeds.com was one of the most exciting and challenging things I’ve undertaken to date, and it may be of interest to understand my motivations in doing so.

There was initial resistance from some of the stakeholders in the pharmaceutical distribution ecosystem due to the lack of clarity on the regulatory aspects. However, the realisation is quickly dawning within the corridors of power, that to fulfil the basic fundamental right of every citizen’s access basic healthcare services – going online is the solution. Whether it is to help old patients who lack access to offline pharmacies or to reach remote areas where essential prescription drugs and medicines are not easily available, e-pharmacies can ensure that patients’ needs are addressed on time. DCGI is already reviewing a study and setting up a registry of legitimate online pharmacies that will ensure compliance and patient safety while ensuring such entities work within a legal framework. The validation from the government of India is the outcome of the hard work we have put in and the results are there for all to see. For a country like India, where a big part of the rural population is underserved, online pharmacies have ensured that people who don’t have access to a chemist or a hospital, can get life-saving drugs delivered to their door steps.

We did face challenges in bringing about that mind-set shift from the conventional practice of visiting the nearby pharmacy, to come online to meet your medicinal needs. It involved educating consumers about the benefits e- pharmacies can bring to them. Basic things like the importance of consulting a doctor in case of illness and having a prescription, rather than ‘self-medicating’ is a concept that we have helped to inculcate. Further, such customers to be brought online needs a collective effort from all industry stakeholders.

Another challenge we have faced is misinformation regarding ‘fake’ medicines. A common concern raised about online pharmacies is regarding the quality of medicine sold. There is a tendency to raise the spectre of counterfeit or expired medicine, as if purchasing medicine online might somehow increase the chances of getting spurious medicine.

It’s an ironic reference because in reality, getting medicines from an established, licensed online pharmacy actually negates the possibility of getting anything but 100 per cent authentic medicines and branded OTC products. Large and reputed online pharmacies insist on up-to-date prescriptions which are linked to manufacturers’ batch numbers and expirations dates. We also deal either directly with manufacturers or with very established and trust-worthy master distributors. The supply chain is much more secured, organised and regulated, virtually ruling out the possibility of fakes or expired drugs entering the system. As a great side-benefit to this new approach, we are also able to amass a very accurate database, all of which is linked back to manufacturers’ batch numbers, providing invaluable data to all healthcare stakeholders.

For any e-commerce company, addressing the issue of logistics to cover the vast country like India in itself is a challenge. Timely sourcing of the prescription medicines and Over-The-Counter (OTC) products in one basket, as the typical chronic patient may be taking as many as six different medicines a month, sometimes more. And we have to get the orders delivered quickly. To this end we are excited about developing and implementing AI to ensure on-time and flawless delivery. To sum up, the use of technology to overcome challenges and give people a better quality of life will eventually improve the health of the nation. And to contribute to a strong and healthy nation is the dream we are working towards.

An easy and effective way to manage chronic problems – Man Mohan Gupta, Co Founder, Mymedicinebox.in 

Alibaba, the Chinese e-commerce giant, on 11.11.2017 sold goods worth $25.4 billion, smashing its own record of 2016. Ecommerce is now a thriving industry in India. Home-grown Indian companies like Flipkart, Snapdeal and Paytm have redefined customer experience and breaking online shopping inertia. However, ePharmacy still remains widely untapped with tremendous potential in the future. The market growth is fuelled by the rise of lifestyle disorders and large number of people are suffering from chronic diseases like diabetes, hypertension, asthma and obesity, leading to an increased requirement of therapeutics.

Unfortunately, the ePharmacy business in India is viewed with suspicion by the regulatory authorities even though it had clarified that there was no restriction on online sale of drugs till it complied with the existing FDA regulations.

It is a known fact that most of medical stores sell medicines without prescriptions and do not abide by the regulations. Most of the time, patients are forced to buy alternatives and substitutes on recommendations of pharmacists selling at stores.

Whereas epharmacies are  trustworthy and always sell medicines as per prescriptions. In the last three years at MyMedicineBox, no medicine was sold without a genuine bill and always procured from  renowned distributors of respective companies and are 100 per cent authentic. More than 50000 customers buy with full confidence. The Indian Pharmacy business is governed by number of acts and notifications. It is mandatory to sell medicines on valid prescription issued by the registered practitioners while there is no mechanism and coordination between the laws which govern doctors and medical stores. It is the need of hour that there should be only one Indian medical code which covers entire healthcare. One nation One Medical Code. Recently, draft rules are framed to regulate the sale of medicines online and to avoid  present ambiguity and uncertainty.

India is a country of youngsters and yong India is spending  time using their smartphones and surfing online so purchasing   online will not be an issue. I am a member of FICCI committee helping in framing guidelines. I am confident the proposed regulations will regulate the online selling of medicines effectively and will prevent misuse and pave the way for transparent competition to benefit patients at large. It will also benefit people living even in small towns.

Infact, ePharmacies have created challanges  for brick and mortar medical stores. ePharmacies has educated the masses  about buying right medicines at best prices.

Technology is helping ePharmacies to scale up the business and offering more transparency and patients are well informed .ePharmacies are still at a very nascent stage in India. ePharmacies and healthcare is an important segment in the Indian E – commerce industry, it is anticipated to grow at a CAGR of over 20 per cent, crossing the $ 3 billion mark by 2024.

We see great opportunities in the Indian ePharmacy market as it opens employment opportunities at large. MyMedicineBox tag line is Accessibility – Availability – Affordability – Alacrity.

ePharmacies will create opportunity to improve the overall healthcare quality in India and will support E-Healthcare & Digital India Initiatives by  the government at large.

It is important to mention that the government has shown some initiative to encourage E-pharmacies. The Department of Pharmaceuticals, Government of India has formulated the “Draft Pharmaceutical Policy 2017”, wherein it has recommended that E-pharmacies should be encouraged in the interest of consumers. This policy also envisages detailed guidelines for E-pharmacies in addition to recognising the potential for foreign direct investment in this sector.

There is a need for more clarity on e-pharmacies – Sripal Bachawat, Director, C-Square

Indian government is very pro online pharmacies. While it has several good aspects of online pharmacie there are few grey areas which needs a clarification. Either they have thought about it but we could not interpret it or it’s a real grey area. Current challenges on draft rules

1. Doing online business can be done by a regular pharmacy by taking license but the law expects 12 hours for all seven days for support and that too by a registered pharmacist. Does it mean extra burden for small pharmacies?

2. How will the market place work and who is responsible for the customer? The physical pharmacy license holder or e-pharmacy license holder?

3. Does it mean providing home delivery by physical pharmacy will also require to apply for e-pharmacy license ?

4. As per law customer information should not be revealed to any other person. Does it mean courier by third party is not allowed?

Benefit to consumers by e-pharmacy

E-pharmacy is inevitable. With digital adoption, customers’ busy schedule, traffic and parking issues in cities – Buying medicine is no longer an easy task and online is solving the purpose. This business will consumers in a big way if:

1. Discount war is avoided – The draw back of discount war is that it will force low capital holders to opt for buying from unreliable sources for the sake of better margin and consumers health may be compromised. Recently a big consignment got caught which was spurious in nature.

2. Level playing field for existing stores – Most of the Indian pharmacy are bread winners for their family. More than 20 lakh families are directly dependent on this business. If same margins are not available to small ones then they will die due to non-profit generation from this business.

3. All physical stores to be technologically uplifted. Currently, they run away because of lack of knowledge.

How e-pharmacy business will be sustainable.

1. Today, in India, a pharma distributor serves the retailer with an average bill value of `1200 – 1800. Retailer is given a trade margin of 20 per cent on MRP. Apart from this distributor passes on 2-5 per cent cash discount for retailer to pay within 7-15 days. Distributor travels 1-20 km to deliver at retailers doorstep.

2. E-Pharmacy average bill value is also around `1200-1800.  E-Pharmacy also passes 20 per cent to consumer. Consumer pays instantly. E-pharmacy travels 1-10 km for delivery.

3. With above two examples – If E-pharmacy practices model of distributors and not retailers, they will become profitable in less time. Current challenge or marketing spend will be only to acquire customers.

4. If E-pharmacy joins hands with existing physical stores then they can supply in less than 90 minutes to customers. This will give double benefit – It will be an inclusive affair (including existing pharmacy) and the second customer will get both convenience and speed of delivery (very useful for acute medicines). However, E-pharmacies are again getting trapped with lack of clarity. Recent ruling from Madras court has put all portals  in dilemma. It says that any license holder can continue to operate. As far as e-pharmacy licenses are concerned, law is yet to be passed for a separate license. On the other hand, if it is mentioning about drug license, most of the e-pharmacies are working like aggregators and using local pharmacy as a point of sale. It is evident that e-pharmacy business will need another year or so to get a clarity on their do’s and dont’s.

e-pharmacies offer useful health info on website – Dr Sujit Paul, MD, StayHappi Pharmacy

In the US, big pharmacy retailers such as Walgreens and CVS have been focused on the ‘online space’ for a while, whilst we have seen the traction coming in India off late. Not only does online pharmacy miss out on that face-to-face contact but there is also the huge expense of delivery. The idea that it’s more efficient is not yet proven, hence I always recommend all the current players to keep a close eye on the supply chain and fulfilment cost. Abroad local drug stores have websites; you may be able to use one to fill or renew a prescription. You will recognise their names: CVS, Walgreens, Rite Aid, or dozens of others. Unless you have questions about your local pharmacy’s reputation, there should be no problem purchasing drugs from their websites. I have seen companies mushrooming in online pharma selling over the last one year, however once regulated with enough checks and balances, e-pharmacy would enable consumer to order medicines in a convenient manner, from their mobile or computer. This will significantly help patients who are already sick and not in a condition to go out to find a pharmacy. However the three major steps to effectively integrate online pharmacy in Indian healthcare would be to link the below:

1. To offer high quality generic drugs — With differences in patent concerns, and that we have patients with wide income strata online pharmacies based need to offer a much more extensive selection of generic equivalents of brand name drugs, and true generic medicines with molecule names, which Stayhappi intends to do in the online space as well, so as to ensure that High Quality Medicine reaches to the end consumer at an affordable price.

Easy access to additional medical information — A particular benefit of many online pharmacies is the inclusion of useful health information on the site itself. Information regarding the medicines themselves, potential harmful interactions, and links to other resources such as university research, governmental agencies and regulations, and established medical associations are often provided on the better pharma sites. As with all other forms of health information presented online, one should evaluate such information carefully and critically. I strongly recommend this, as I believe that patients need to be educated and they should not only be dependent on their clinician for knowledge. In our health system a better integration could happen , if the online pharmacy feeds the patient with the desired information of his need and offers true value.
Ability to purchase without prescription — Be it good or be it bad, many online pharma sites that have recently started marketing themselves do not ask for 100 per cent prescription as what I have seen in India.  This allows for an individual to obtain medicines without the expensive and often times embarrassing visit to a doctor. This, however, removes a layer of protection provided by consultation with and diagnosis by a trained medical professional, though I never recommend self medication personally and purchase of controlled substances without an appropriate prescription may involve serious health risks as well.

There are multiple lobbying against online pharmacies that have been going on, which is but obvious, thereby a structured approach move towards the space, will really diminish the share of brick and mortar, as we have already understood the Indian mindset of online purchasing, right from pin to house, and so would it be in medicines soon.

Digital renaissance: The e-pharmacy conundrum – Tabish Sangra, Co-Founder & Chief Information Officer (CIO), Aiolos Solutions

Disruption is passé, the age of digital transformation (DT) is upon us. Every sector is facing the full brunt of this tectonic shift that has challenged our understanding of markets, customer service and business models. Healthcare has traditionally been a laggard in technology adoption; the technology debt has always been off the charts. It’s no surprise then that there is massive resistance to change across the board and digital transformation has been slow and deliberate. Having helped several Fortune500 companies, including marquee healthcare leaders design, plan and navigate through their Digital Transformation transitions, I’ve crystallised these transformation endeavours into four distinct stages–I&3R–Inertia, Resistance, Revolt & Renaissance.

The Indian pharmacy retail market is pegged at $6 Billion, growing at a steady clip of 18 per cent annually. Of an estimated 900,000 pharmacies that serve the neighbourhoods of a rapidly urbanising India, only 6 per cent constitute organised retail; little wonder then that the ‘mom n pop’ stores account for 45 per cent  of the market revenue and consequently, have huge ‘Inertia’ to any change. Organised pharmacy retail is thriving too, growing at an average of 25 per cent and is expected to blow up to 35-40 per cent over the next couple of years. Piece this together with the Indian e-comm juggernaut that’s estimated to grow at a CAGR of 35 per cent (till 2020) and you’ll see why there are now 300+ Indian e-pharmacy startups, 25 of which have already raised in excess of $200 million in funding. The pie is big, however the threat is real and the traditional incumbents feel threatened, hence the ‘resistance’ – unorganised vs organised and offline vs online.

The ‘revolt’ manifested itself in the many bandhs organised by offline pharmacy retail associations against e-pharmacies and the attempts to formalise them as a legal sales channel. That the e-pharmacies account for a meagre 2-3 per cent of total drug sales in India seems to have no bearing on this opposition. The most recent bandh organized by the All India Organization of Chemists and Druggists (AIOCD) was in September and was widely viewed to be in protest of the draft guidelines on online sale of drugs released by the Union Health Ministry in the same month.

There are quite a few issues plaguing offline pharma retail. Incidents of sale of counterfeit medicines, medicine sale without prescription, mass dispensation of habit-forming, prescription drugs are rampant and well-known here too. Moreover, most pharmacies are low-tech and have sub-optimal supply chain management which results in loss in revenue. According to recent estimates, retail pharmacies are able to service only 60 per cent of the medicine consumption demand; we are far behind our goal of providing inclusive, affordable and universal healthcare.

The above scenario sets the stage for the ‘Renaissance’. No individual or corporation has monopoly over E-commerce or digital as a sales channel. That e-comm businesses have gone on to become monopolies leveraging network effects is a different study, however, digital is a free for all, level playing field; therein lies the real opportunity. In my view, e-pharmacies are an eventuality and medicine e-comm makes a strong case given the hyper change in user behaviour among centennials. The market presents a golden opportunity for unorganised retail to embrace digital transformation and make the transition from unorganised to omni-channel retail. If this mass exodus comes into effect, it’ll positively send metrics of revenue, margins, medicine availability & affordability and customer service into orbit! Like I said earlier, digital transformation of healthcare is already upon us and it’s imperative that we ensure that all stakeholders are equal participants of this paradigm shift. Unorganised retail is also a great avenue of entrepreneurship and employment to thousands of Indian families and we need to look at how we can integrate them into the post-modern healthcare ecosystem.

The government is already thinking in the right direction and enablers are being mooted and refined. For instance, let’s look at a tenet of the e-pharmacy framework proposed by the government: as per the latest draft rules, e-pharmacies need to apply to Central Drugs Standard Control Organisation (CDSCO) to obtain a license for selling medicines online. The fees for the license is ` 50,000, valid for a period of three years and renewable subject to timely inspections and approvals. It’s also instructed that the e-pharmacy run a pharmacist customer support center and that the e-pharmacy cannot sell narcotic or psychotropic drugs online. These steps and more, are great moves and certainly dispel the ambiguity around doing business online and proprietor owned, unorganised pharmacies can effect a significant revenue upheaval by playing smart.

The e-pharmacy association and owners have written to the High Court seeking further clarification. Again, a classic case of Inertia->Resistance->Revolt. The Healthcare Ministry is making the right moves, consumer demand is growing and the tail winds are telling. Now it’s up to the entrepreneurs of India to leapfrog into Digital Bharat and usher India into a digital era of healthcare services.