E-pharmacies divided over their legal status

Madras High Court will hear a petition from Tamil Nadu Chemists and Druggists Association that has challenged the existence of e-pharmacies.

DIVYA RAJAGOPAL | ET Bureau
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India’s online pharmacy startups are a divided house. Two factions in the nascent e-pharmacy segment have taken diametrically opposite view on a public interest litigation that challenges the legality of these startups.

On Monday, the Madras High Court will hear a petition from Tamil Nadu Chemists and Druggists Association that has challenged the existence of e-pharmacies on the grounds that they are running in violation of the Drugs and Cosmetics Act.

Are online pharmacies intermediaries or a full-fledged pharmacy stores requiring a licence? This is the contention that the Madras HC will hear.

On one side are the online startups with a legacy in pharma business who think it is imperative for them to have a licence like a pharmacy shop. Pitted against them are those who think they are “Swiggy”, or mere deliverers, of medicine business and therefore don’t require one.

In October, the HC also granted a stay on suspension of operations of e-pharmacies that run without a licence. It is here where the start-ups have taken a different view. “There are two models, like Netmeds and M Chemist, who have a licence and the court says they can operate. Those with marketplace model (like 1mg and PharmEasy) say they are intermediaries who source from licensed pharmacies and hence do not need a license”, said Rajiv Gulati of E Pharmacy Association to ET.

Pradeep Dadha, founder of NetMeds, said that as a fully licensed pharmacy, it is committed to adhering to all the guidelines and rules under the Drugs & Cosmetics Act. Dadha added that he is “pleased” with outcome of the recent court hearing that said it will not restrict licensed e pharmacies from selling medicines on its platforms.

Like Netmeds, M Chemist and Medlife have licences. However startups like PharmEasy and 1Mg, who call themselves as intermediaries or a market place, are of the view that though they do not have a licence, the pharmacy chains through which they source and deliver medicines have one. “We explained to the court that we are an intermediary (Covered by the IT Act) and we ensure that all the vendors on our platform operate with the licence under the D&C Act”, said Prashant Tandon, founder of 1Mg, an e-pharmacy startup. As an intermediary platform, given they do not dispense medicines, the license required for dispensation for a pharmacy is not really applicable to them, says Tandon.

Tandon believes that legal entities should look at the draft rules for pharmacies released in September this year that indicated that all e-platforms should apply for a central registration.

The offline trader lobby, which is politically and financially powerful, see the entry of e-pharmacies as a threat and have waged legal battles in several courts to thwart the emergence of these startups, an industry official, who did not wish to be identified, said.

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