In 2012, Prashant Tandon set up his e-pharmacy 1mg in Gurugram. It was a maverick move at a time when most valuable new companies in India were being set up in the startup hub of Bangalore. Fast forward just over half a decade and Tandon stands vindicated. Now, one of India’s largest e-pharmacies, 1mg had over 2.4 million active users last month, four times the number of users its closest competitor Practo had, according to App Annie. It has built this popularity on the back of its digital content—creating a database of which brands sell which drugs and at what price. However, none of this would have been possible were it not for 1mg’s unconventional choice of location.
While 1mg was growing unhindered in Gurugram, its competitors in other states were backed into a corner by state regulators and offline pharmacies.
In Jaipur, for instance, statues were burnt and rallies were held by incensed traditional pharmacists to intimidate e-pharmacies in 2016. Death threats were also sent. They were even banned in Jaipur until Rajasthan Chief Minister Vasundhara Raje stepped in, recounts Deepesh Rajpal, co-founder of e-pharmacy LifCare. While LifCare survived this onslaught, Zigy, a similar venture founded by former Infosys director Phaneesh Murthy, closed down in 2016 after an advertising ban and multiple court cases filed by traditional pharmacists proved fatal.
It was not because we were doing anything illegal, but because the law was ambiguous, Rajpal says. The law in question, the archaic Drugs and Cosmetics Rules, 1945, allowed regulators to crack down on e-pharmacies since they could not monitor whether e-pharmacies were compliant with certain aspects of the law. For instance, it required stamping prescriptions to avoid someone using the same prescription to buy drugs from multiple pharmacies. Similarly, it wasn’t possible to ensure that drugs were handed over to an adult. The risks with e-pharmacies were too many, and regulators in most states decided to crack the whip.
Regulators in Haryana, meanwhile, were considerably more relaxed, giving 1mg a relatively hassle-free existence. This advantage, though, may soon be a relic of the past.
The Indian government is set to level the e-pharmacy playing field, with the health ministry suggesting new regulations that effectively legitimise e-pharmacies. The proposed new regulations will amend the Drugs and Cosmetics Rules, 1945, and recognise e-pharmacies as legal entities. These were circulated among state drug regulators last month. Traditional pharmacists, who were up in arms last year after the government suggested they digitise their supply chain in a public notice on online and offline sale of drugs, stand pacified as well. The proposed regulations no longer make a mention of the controversial suggestion.