Impact of E-Phar macies

Impact of E-Pharmacies

Waji Arshad- IIM Amritsar

Mr. Joseph, on permanent medication, living alone in the suburbs of Mumbai finds himself running short on medicines, and given the current pandemic, it would not be wise for a man in his 50s to venture out. This kind of a scenario would have been a perfect recipe for disaster; an old man caught between a life-threatening fast spreading disease and residential health issues requiring constant augmentation to immune system.

But thanks to a plethora of startups in the field of delivering medicines to home, Mr. Joseph now can have access to critical medicines without having to venture out.

This idea of E-pharmacy started gaining traction in India in 2015 with the advent of two popular online pharmacies such as Netmeds and 1mg and have made good inroads thanks to the exponential increase in the digital footprint of Indian population.

Rules governing E-Pharmacies in India:

At present, there is a vacuum when it comes to laws enacted by the Union Government concerning online sales of prescription-based medicines in India. However, there exist an association of online pharmacies formed in 2015, IIPA (Indian Internet Pharmacy Association) comprising of 11 E-Pharmacies with Mr. Prashant Tandon (founder of 1mg as president). IIPA enacted ethical set

of rules in compliance with the country’s legal framework to be applicable to all the members. It received good support from the Union Government as E-Pharmacies were in line with government’s digital India initiative.

Some of the other laws that E-Pharmacies in India adheres to are: Drugs and Cosmetics Act 1940, Drugs and Cosmetic Rules 1945, Pharmacy Act 1948, Indian Medical Act 1956 and Information Technology Act, 2000 governing online sales of medicines.

Model: E-Pharmacies in India are currently working on two models, viz, Inventory model and Market Place model. As the name suggests, the former is online selling of inventory of a single entity while the latter is a market place for various registered pharmacies to sell their drugs.

Growth Engine: Exponential growth in the digital landscape of India has been the biggest contributor to burgeoning growth of E-Pharmacies.

Positives of E-Pharmacies:

This example of Mr. Joseph itself evinces the power of intervention these E-Pharmacies possess in critical times like these, but beyond that E-Pharmacies have started deep penetration assuaging the customer apprehension towards online medicine purchase by doling out steep discounts. This discount strategy borrowed from other e-commerce platforms worked as desired for E-Pharmacies as well. But beyond customer acquisition, there are other critical benefits of E-Pharmacies enumerated below:

• Control over drugs sold without prescription: In India, majority of front-end sales personnel employed in pharmacies engage in sales of drugs without soliciting prescription. One can even get highly regulated drugs without prescription, if there is some acquaintance or the is willing to splurge a bit more. This practice is put to rest in online pharmacies where drugs are dispatched only after due diligence of the uploaded prescription.

• Central repository: All drugs sold through EPharmacies are accounted for and can be traced back from the customer to the supplier. This sort of arrangement is not possible in scattered offline pharmacies. A central repository can help a nation in many ways, most premier and evident being an aid in constructing the national health policy.

• Reducing the information asymmetry: For years, Indian consumers have been in the dark with respect to most aspects of medicines. With the advent of E-Pharmacies, consumers can now get a lot more information about the medicine, its contents, various sizes, read reviews, and select the right brand for themselves.

• Availability: There is a limit to what offline pharmacies can store and hence a ceiling on brands and assortments, but with E-Pharmacies, there is no such issue as they usually have a central warehouse or multiple sellers giving huge array of brands at customers disposal.

Limitations:

• E-Pharmacies still don’t have express deliveries hence offline retailers are still the preferred choice when it comes to ad-hoc medication requirements.

• In normal times, relationship, trust and instant fulfillment from nearby offline pharmacy is yet to be matched, as offline sellers are marching towards discount parity.

Threats:

In 2018 All India Organization of Chemists and Druggists (AIOCD) observed a day long strike prompting Indian government to draft laws prohibiting online sales of medicines through an E-Pharmacy unless registered. This was governments reaction to the protest, what other rules may come up in future is yet to be seen.

E-Pharmacies in the post Covid-19 world:

There are few in this world who can claim that Covid-19 has been a boon for them, but its E-Pharmacies definitely has to be one of them. It has been a heaven-sent opportunity for them. Covid-19 has helped E-Pharmacies eliminate the biggest impediment in their quest towards moving to the next level- making consumers like Mr. Joseph develop the habit of purchasing medicines online.

But to make sure this change is purchasing pattern in irreversible; E-Pharmacies need to come up with innovative solutions to solve consumer needs. Their value proposition hitherto, is being diminished as offline players have started matching the discounts and home delivery. Offline players though still hold the aces up their sleeves when it comes to instant delivery fulfilment for ad-hoc purchases.

E-Pharmacies can adopt some of the below-enumerated ways to come up with a meaningful value preposition:

• Offering monthly subscriptions to consumers on permanent medication

• Expert advice and one touch solutions to que• Leveraging the data generated by consumers, and predict consumption requirements, and sending reminders

• Working closely with medical practitioners to leverage the benefits of data generated for both the consumers and the experts.

E-pharmacies gained traction because of increase in digital footprint of Indian population and achieved over 3500 Crores in revenue by 2018. Covid-19 has provided another positive intervention, this time in changing the consumer buying behavior. This change if handled well, can act as stepping stone to unlock the potential of E-Pharmacies in over US$ 20 billion Indian drug market.