Investment surge in E-pharmacy sector

2018 has demonstrated highest amount of private equity and venture capital investment in the country’s online pharmacy sector. The sector observed 10 deals of worth $140 million (Rs 8.8 billion) in 2018, as compared to five deals worth $37 million in 2017, according to data from Venture Intelligence, a research and analysis entity. Moreover, estimates the e-pharmacy market potential at over a billion dollars, with emergence of Amazon and Flipkart to get into this sector. The manpower supporting e-pharmacy today is around 20,000 with 1.5 million customers, according to a senior member of Digital Health Platform, the combination of online sellers.

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Trade margins:

Trade margins are being suggested by DPCO and hence almost everybody in industry is following the same practice. This leads to almost 16%-20% margin on MRP for a pharmacist and 10% margin for stockist or distributors in this chain. In other words when MRP is Rs. 100 actual realisation price for company becomes Rs. 72 and overall margin Rs. 28 is given from MRP to middlemen!

Secondly, the manufacturing companies are licensed in each state in such a way that there is over capacity to manufacture medicines in India. Contract manufacturing wave has further taken ride and has saved the manufacturing cost, manufacturing charges which are also stipulated as per DPCO is the earning of contract manufacturers.

This overcapacity has rendered support to so many manufacturers or marketers who manufacture their products with these contract manufacturers. As a result we have plethora of generics available.

Recently Competition Commission of India released POLICY NOTE for affordable healthcare and mentions the first issue of high trade margins.

Considering this context, the policy note is talking about the trade margins stipulated by law or as a result of increased availability and high competition that those small manufacturers are offering high margins beyond stipulation on MRP.

To improve direct sale, generic manufacturers offer more margins to push their products. These trade margins have been very well exploited.

Online pharmacy:

e-pharmacy if properly regulated the special mention of trade margins from patient point of view will be already taken care off. They would charge but they won’t be equivalent to services charges as much as trade margins. This particular mode of delivery will also obviate trade association self-regulation.

The entire drug distribution and availability is already at reduced price and will be available at door steps if digital mode is followed, obviously with regulation.

Perception of quality:

In case of quality perception behind proliferation of branded generics, as explained earlier will be injustice to those whom permission to manufacture and market generics is already given. Branded generics might be useful tool if there is process patent with the company to manufacture that particular generic which we used to have earlier in India before WTO stipulated increase on branded generics and can be permitted but no one drug one company one brand name could be insisted.

Another though of providing one generic name could be a good idea but definitely not one company and one drug.

New hospital policy:

In case of vertical arrangements in Healthcare services, providing an option to buy medications from outside for prescription generated in hospital could be additional boon to patient, however there should be no substitution on generic or branded generic name which is mentioned on prescription. There is a clinical experience with generic or branded generic medicines with healthcare providers hence that professional sanctity should be followed.

Portability of Patient Data is really marvellous thought and should be deployed so that multiple costs are saved from patient point of view.


In case of Regulation and competition as there are different bodies governing in different states integrating all these licenses could be great, imperative methods could be many in this process as digitization has made it transparent there could be supervision from the regulatory sight which can look at the anomalies and correct them.

Major issues today is, shortage of HCP which could be resolved by more than available 6000 pharmacists in India even in rural India’s. This learned population of pharmacist can be upgraded to take care of primary healthcare even in rural area with adequate certification or participation.

Health insurance:

Health insurance is an important aspect whereby pear like patient get subsidised and his affordability increases. Ministry of health, NITI Aayog, ayushman and their imperative should be given importance from implementation point of view.

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