Online pharmacies including Amazon, Flipkart, and Tata 1mg are facing the closure of their operations in India as the Union Health Ministry plans to take strong action against them for violating the Drugs and Cosmetics Act 1940. The show-cause notice, served a week ago to around 20 online pharmacies, including MediBuddy, NetMeds, Practo, Apollo, and Frankross, requested clarification as to why action should not be taken against them for the sale, stock, or distribution of drugs without a license. The notice stated that the misuse of drugs through self-medication and indiscriminate use of drugs through online platforms posed a risk to public health and the quality of drugs. The All India Organisation Of Chemists and Druggists has demanded action against these pharmacies and threatened to hold a nationwide strike against them. The Confederation of All India Traders has urged the health ministry to put the recommendation of the Group of Ministers on the issue of selling drugs online, constituted over two years ago, in the public domain.
The online pharmacy market in India has emerged as a successful segment of the healthtech industry, with startups like PharmEasy, 1mg (owned by Tata), and Netmeds gaining significant traction. Even major e-commerce players like Amazon and Flipkart have entered the pharmacy business. The online pharmacy sector has also received substantial funding from prominent investors such as Sequoia, Tiger Global, and B Capital Group.
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Despite the success, the online pharmacy market in India has seen only a few mergers and acquisitions, including PharmEasy’s acquisition of Thyrocare for $600 million and Tata Digital’s acquisition of 1mg for $230 million. Although it is a recession-proof industry, online healthcare only saw a significant increase during the pandemic when people avoided going to physical pharmacies even after lockdowns ended. While tele consultations have declined since the return of normalcy, the online pharmacy segment has maintained its growth due to the convenience it offers and the overall increase in e-commerce adoption.
The future of the online pharmacy market in India looks positive, with KPMG–FICCI predicting a compound annual growth rate of 40-45%. This is largely due to the increasing number of people accessing the internet, convenient digital payments options and government initiatives. The report also states that the online pharmacy market was valued at $344.8 million in 2021 and that medicine spending in India is expected to increase by 9-12% over the next five years.
