Online pharmacies are streamlining India’s fragmented retail pharma supply chain with a much needed dose of technology By Usha Sharma
Online pharmacies in India have gained significant attention over the last one and half years. The concept of buying medicines online might seem new today, but users are well aware of its implications. The online pharmacy space in India features small as well as big players like Bigchemist, mChemist, Pharmaeasy, 1mg.com, Bookmeds, Medidart, Medlife, Medstar, Nedmeds, SaveOnMedicals, Zigy.com, and Savemymedsa. Most of these players ventured into this space less than two years back but in this short period, managed to establish themselves considerably largely due to technology.
However, the sector is seen to be in violation of norms and has faced a backlash due to the lack of regulatory guidelines. Today, the biggest challenge to these players is that in the absence of guidelines specific to online sale of medicines, they need to follow existing guidelines applicable to traditional brick and mortar chemist stores as well as maintain a good distribution supply chain. Therefore it is only to be expected that these players are reportedly eagerly awaiting guidelines designed for online sale of medicines as these might give them relief and address the perception of both regulators and patients that they are violating norms.
Pharma logistics: The missing link
Unlike developed markets like the US and UK, India does not have a set of guidelines for online sale of medicines but is set to follow in the footsteps of these countries.
As Pradeep Dadha, Founder and CEO, Nedmed.com explains, “I think everyone first looks to the US, for good reason, since national chains like Walgreens and CVS have been perfecting the mail order business for more than a decade now, and where there are about 400 licensed “e-pharmacies”. UK, Canada, many EU countries have all demonstrated that the e-pharma business is safe and convenient and benefits the consumer and the overall health picture.”
The regulatory environment in these countries is different, may be due to clearly articulated guidelines or the trust levels built up by both pharma as well as logistic providers. It is to be noted that online pharmacies in these countries have also gained the trust of patients, by proving that getting a medicine through online platforms is safe and has minimal risk to life. However, the situation is completely different in India as there is still a huge possibility that the patient/ consumer receives adulterated/ spurious/ fake/ expired medicines and is unsure about the authenticity of these products.
This could be due to many reasons, the primary one being a lack of supply chain management. Drug distribution in India has witnessed a paradigm shift. Before 1990, pharma companies established their own depots and warehouses. Now they have been replaced by clearing and forwarding agents (CFAs). As Siddharth Singhal, CEO, Vibcare and official spokesperson of India Internet Pharmacy Association (IIPA) informs, “Until now, the pharmacy supply chain has been devoid of high-end technology. Distribution (of medicines) has been through the traditional way, with no accountability and efficiency in the processes. A pharmacy or a hospital works with close to 21-35 distributors to stock all their requirements, which in itself poses a lot of operational inefficiencies including higher manpower costs.” Dealing with multiple distributors, each having their own payment terms and credit charges, poses a big problem for the retailer.
Challenges in pharma distribution channels
Listing the challenges plaguing the entire pharma distribution chain, Dadha says, “The challenges include receiving, vetting and digitising the prescriptions, stocking and picking from the vast number of SKUs, the fact that most orders include multiple items, and a mix of medicine and OTC products, and the delivery area is a huge expanse of country, served by a multiplicity of last mile couriers.”
Secondly, the easy access to medicines poses its own set of problems as self medication is a big challenge and one of the most common case of abuse/ misuse in the pharma space in countries like India. Patients have easy access to any drugs without having a valid prescription. At times, the easy access to medicine also results in over consumption of medicines. The presence of counterfeit drugs in the market is also a huge issue for the industry. To counter this, online pharmacies deploy an intelligent combination of data analytics to ensure safety and transparency in the system by redefining end-to-end solutions and strengthening the logistics and supply chain pan India.
The unavailability of records for dispensed medicines poses yet another challenge. Since India still follows the traditional methods for dispensing medicines, maintaining records is almost nil.
As Dharmil Sheth, Founder, Pharmeasy, reveals, “Digital records and tracking is the biggest challenge in the pharma distribution channel today. In case of any drug recall or spurious drugs entering the chain, it would be difficult to track it down to the last mile. A major chunk of retailers do not use digital platforms for invoicing or maintaining inventory. This makes it difficult to maintain sales records of patients consuming medicines.”
Today, very few physical pharmacy stores follow the set rules and regulations specified in the law. If online pharmacies get guidelines specific to their sector, then a major factor is that each player would need to maintain e-records. Sheth emphaises, “The online channel is at a very nascent stage and has a potential to grow 50 times in the coming five years. In the e-pharmacy model, every transaction is recorded and tracked. There is no possibility of medicines being sold without prescriptions, and this can easily be audited and verified. Also, dispensation is done by a licensed pharmacist, under his license and from licensed pharmacy premises – significantly positive compared to the prevailing model in the market where medicines are commonly available without a tracking and record of prescriptions.”
Bringing in good distribution practices
So what are the fundamentals of good distribution practices that online pharmacies need to follow? Are there global standards which can be adopted by online pharmacies in India? Most developed countries have already established an eco-system for safe and secure pharma distribution via e-pharmacies. Singhal informs, “(The business model of) E-pharmacy has gained prominence in many parts of the world including the US, the UK, Canada and Brazil. Most of these countries have a centralised electronic health record (EHR)-based method which helps them operate under clearer guidelines. Unfortunately in India no such systems exists and it will be quite some time till the concept of EHR and e-prescription takes off.”
Explaining the requirements of good distribution practices for e-pharmacies, Dadha spells out, “Good practices start at the point of prescription receipt where a large team of certified pharmacists, working round the clock, examine each prescription for validity. At the fulfillment level, additional pharmacists and pharma technicians oversee the selection of products aligning proper drugs, dosages, expiration dates with the dictates of the prescription. The process is further supported by technology, barcode scanning, digital video capture of each order being processed.”
While informing about the situation in India, Singhal highlights, “Given that the percentage of e-prescriptions in India is not even 0.01 per cent, this poses a whole new challenge for e-pharmacies to cater to consumers as doctors are neither tech savvy enough to issue e-prescription nor do they feel any need to shift from hand-written prescription to e-prescription. e-pharmacies in India are now being forced to face another hurdle by the recent announcement by a government subcommittee that e-pharmacies can only operate and dispense drugs on e-prescriptions and cannot accept offline prescriptions. Given the limited amount of takers in the market to this new amendment, this clause has the potential to grossly affect consumers and online players alike.”
Given the way global markets like the US and the UK have evolved, Sheth feels that, “The only way to connect and get all the stakeholders of the healthcare eco-system on a common platform is to go digital.”
Tech-enabled pharma logistics
Comparing good distribution practices for online pharmacies and current practices used by retail pharmacies, Bhavik Kumar, Co-Founder, Medibox Technologies points out the shortcomings of the latter saying, “The existing system lacks tracability, audit trail and validation of actual delivery. These issues are efficiently and effectively addressed through the practices followed by online pharmacies. A good distribution will also help control abuse and misuse to a large extent. This delivery mechanism should be adapted for all forms of distribution.”
India still follows the traditional method of dispensing medicines to patients/ consumers. The unfortunate situation is that patients in India are still not sure if the medicines they consume are genuine or fake. And this is the situation not just in rural areas of the country but also in metros like Mumbai and Delhi.
So what could be a solution? Can technology be a saviour? Kumar believes it can, explaining, “Technology not only can help e-pharmacy players ensure good distribution network but could help the entire supply chain including the distributors and retailers. Proper implementation and use of technology will bring information to the fingertips to all stakeholders. It will help plan production, keep a tab on real-time inventory at all levels of supply chain and provide insights for pro-active decision making. The best outcomes will be in making medicines available where there is a necessity and reduce expiries.”
Agreeing to Kumar’s view, Anoop Sharma, Co-Founder and CEO, drbean.com says, “Technology can help right from design to delivery, and can complete the entire value chain. And today most online pharmacies are technology companies which have, over a period of time, acquired expertise in the pharma domain.”
Further explaining the benefits he says, “One of the key problems today is (that) nobody cares about (buying medicines against) the prescription. There are people who buy medicines for years with the same prescription. (Once there is) full fledged technology implementation in this space, customers will have to buy medicines with valid prescriptions. This helps the enforcement of law in reality and not just on paper.”
The government is presently preparing guidelines for online pharmacies and once they are released, India’s online pharmacy market is expected to open up even further and at a faster pace. “The Indian pharmacy industry is expected to be a $55 billion market by 2020. However, due to the adoption of e-commerce among Indian consumers and rising spends on healthcare, this category is likely to grow and is fast attracting high traction from investors in the past couple of years who have already invested $92.6 million of funding in the business of online pharmacy so far,” informs Singhal.
Thus, over the past couple of years, with the advent of technology, online pharmacies have helped simplify the pharma supply chain by creating an efficient workflow using technology and are slowly streamlining an otherwise disorganised market.
Commenting on operational excellence which can be maintained or achieved by different technologies Kumar specifies, “The value proposition in every part of India is different for different stakeholders when it comes to serving the ailing population. Hence, operational excellence is varied and mixed. However, to generalise, GPS tracking of shipments, bar coding, NFCs, ERPs, accounting software, integration tools, digital solutions, cloud technologies, mobile applications, analytics and relevant algorithms can improve operational efficiencies significantly. Operational excellence therefore could bring standardisations; provide inventory planning and replenishment solutions; go-to-market strategies will give optimum results and reduce supply chain costs significantly.”
A key enabler of this trend has been the evolving role of the mobile phone, which is now not restricted to making calls. Today, the smart phone helps users remain connected to other devices or networks via different wireless protocols. Kumar signifies the benefits of app-enabled technologies in pharma e-distribution channel network and explains how it simplify the entire supply chain. He says, “The distribution industry is fragmented in India with too many players serving the same customers. Hence there are challenges of bullwhip effects of inventory, pilferages, breakages and expiries. Mobile app enabled technologies could benefit the entire gamut of stakeholders including medical representatives, booking agents, distributors and manufacturers. It could reduce manufacturing lead-time, cost of holding inventory, reduce shortages, distribute medicines evenly as needed, remove issues of stock-pile up and much more.”
A bright future
The Indian online pharmacy segment is at nascent stage and regulators are working to frame guidelines for such operations. Signing off, Singhal says, “All online pharmacies are currently strictly abiding by the laws and are very careful while screening prescriptions for authenticity. A lot of online players like Pharmeasy have recorded declining almost 45 to 50 per cent of orders daily due to flawed prescriptions only because they want to adhere to a process and curb the flow of fake prescriptions. This has impacted the business of online pharmacies and if the government imposes clauses like e-prescriptions and restrict intra-state sales it will not allow this industry to evolve and grow at the pace that it is poised to.”