Unclear regulations on e-pharmas may hinder investment

E-pharmacies in India seem to be on a roller-coaster ride. While the sector is witnessing a soaring customer base, the lack of clear regulations by the government is causing anxiety among the stakeholders. On the business front, the e-pharmacy sector is expected to grow at an exponential CAGR of 63% and has nearly 30,000 skilled professionals employed in it. Prashant Tandon, CEO and founder, 1mg, talks to ET.com on how clarity in regulations for e-pharmacies will boost investments in the sector. Economic Times (ET): A staggering 63% growth has been predicted for the e-pharmacy industry and it is one the booming segments among startups. Why do you think that is?Prashant Tandon (PT): I think the growth is because there is essentially a consumer need at the market. The access that the e-pharmacy model is providing is something that the consumer buys and is really appreciative of. People are appreciating a better model of access. And, we have been able to reach tier-II, III, IV, all of that was unbelievable. The demand for e-pharmacies was already there in the market and is now coming onto this model. ET: Many brick and mortar stores have been opposing the move to allow pharmacies to sell medicines online claiming that this can be misused. Do you agree with that?PT: Absolutely not. I think there are a lot of misconceptions and rumors that are being spread. The fact is that this model actually is the only model where there is a full accountability and traceability of every medicine source. Right from which pharmacy source on this prescription to which patient, everything is actually data tracked and recorded. On top of that, we e-pharmacies have operated with our own code of conduct. So many times there are the charges of drug abuse and all of that, but the psychotropic medicines or narcotics, we don't even touch those medicines, we don't engage in their distribution. So there have been attempts by these vested interest groups to try and malign the modern methods, but the fact is that this is actually the most tractable and auditable model. And in fact, India is one of the few countries where in the offline supply chain, there is no accountability, there is no barcode, no digitization, and we need that desperately as a company. But I think right now, this is just misconceptions about the spread. ET: It’s said that Indian e-pharmacies operate in a grey area regulatory. What are your views on that?PT: The model is pretty straightforward. There is a digital platform where a patient has to give the prescription and then the platform passes that prescription to a brick and mortar pharmacy that operates under the Drugs and Cosmetics act. So there is no ambiguity around the compliance with the law. The e-pharmacy model is not breaking any law. Now, the only question is- should the e-pharmacy platform also come under the Drugs and Cosmetics Act. This is what the government has been suggesting, for which they came up with a draft regulation, because right now, the technology platform comes under the IT act. And, now if the technology platform should also be covered by Drugs and Cosmetic Act, it will be up to the government to regulate. So there's a difference between legalization and regulation. The e-pharmacy is a legal model, but it is a model that the government has just not yet regulated. And we have been very supportive of working with the government and we are totally in for having a good regulatory mechanism for the e-pharmacy sector. ET: How do you think Budget 2020 can streamline the regulations for e-pharmacies and what are the your demands from the upcoming Budget?PT: I think we really feel that having a strong and clear regulatory pathway for e-pharmacy is very important for the growth of this sector. And, if the government can promise a very straightforward roadmap or a regulatory letter, if the government can express its positive intent, we will be very happy. In fact, e-pharmacy is one sector, which although is not lagging behind in growth and is gaining consumers, has lagged behind a lot of other sectors in attracting investment. And this sector can really bloom if the regulatory pathways are clear. This can raise many billions of dollars of investment if the government makes a positive statement. The government has been working on draft regulation now, till the final regulation comes out and it has been more than one year since the draft came out. Now, for investors, they need to know what kind of regulation is going to cover this sector, whether it is going to be a lot of extra compliances whether it is easy. So, till the government comes with clarity on the regulatory plan, the investors will feel a little unsure as to what they are investing in, because nobody wants to invest in a sector and then realize that there are so many regulatory barriers being created here. ET: What other challenges you feel the e-pharmacies have yet to overcome in India?PT: The other challenge, I think, is that we don't operate on a level playing field. In e-pharmacy, every single order is tracked, so everything goes with prescription, with full compliance. While in the offline market, which we are competing against, people can just walk into a pharmacy and buy anything. In our case, compliance expectation is only from the e-pharmacy. So, we want equal compliance across all modes of pharmacy and so on. There should be a requirement for offline pharmacies also to comply actively with what is the law.ET: How will the e-pharmacy sector boost the country’s economy?PT: I think access to healthcare is fundamental for long term economic growth and also streamlined and efficient supply chains are very important if we were to reduce the cost of healthcare access. So, there has to be a lot of investment in technology in processes and supply chain. If we are able to create a model of healthcare which does not have so many intermediaries with the cost of so many different leakage points and chances of low quality medicines and fake medicines to enter. So, it is important in national interest to provide good affordable access to health care to everybody. That is a critical requirement and I think e-pharmacy actually streamline a lot of that in the medicine space.

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