India's e-pharmacy market to grow at 45% CAGR in future

At present, the legal regime governing the offline sale of pharmacies is also applicable to e-pharmacy. The government should establish a special legal framework for e-pharmacies to protect the interests of the consumers and to serve as a backbone in facilitating growth in this sector     

Backed by the growing internet penetration, digital payments and government support, the e-pharmacy market in India is expected to witness a robust growth at a compound annual growth rate (CAGR) of around 40-45 per cent in future, according to a recent report by KPMG-FICCI. The KPMG-FICCI study titled 'Impact of the pharma industry on the Indian economy in the post Covid era' anticipates that e-pharmacies hold tremendous growth potential and will continue to grow at an impressive rate in India. Some of the key factors such as growing internet penetration and digital payments infrastructure, rise in industry investments and medicine spending, as well as government initiatives will fuel growth of this sector. The internet users in the country rose by around 47million to reach 624 million in January 2021, and this increase in internet and mobile phone penetration would be a growth driver for the e-pharmacy industry. In India, there is still a lot of scope for internet penetration and it is expected to increase at a CAGR of 8.78 per cent between 2020 and 2025. As a result of this, e-pharmacies would continue to grow in India, with the gradual increase in internet and mobile phone penetration. Apart from this, constant technological upgradation will continue to support this growth.

No doubt, the e-pharmacy sector in India is also attracting huge investments from national and international market leaders. Even as the Covid-19 pandemic was further expanding its tentacles in 2020 and 2021, there was hectic activity in the e-pharmacy sector in the country. As the potential of the sector was gradually unfolding in the country in the wake of the pandemic, especially in the urban areas, in the wake of people's preference for doorstep delivery of medicines, big players were virtually vying with each other to get a substantial part of the e-pharmacy pie. Close on the heels of the US-based e-commerce behemoth Amazon's entry into the sector, Indian retail giant Reliance Retail has also thrown its hat in the ring. Hoping to exploit a fast-growing market fuelled by a large base of smartphone users, Reliance has acquired a majority equity stake in Chennai-based online pharmacy company Netmeds for around Rs. 620 crore. Some time ago, Amazon India had launched its 'Amazon Pharmacy' in Bengaluru to conduct pilots in other cities. Amazon said it was starting 'Amazon Pharmacy' to let its customers order prescription-based medication in addition to over-the-counter medicines, basic medical devices and Ayurveda medication from certified sellers. Earlier, another online pharmacy player PharmEasy had agreed to merge with its smaller rival Medlife. According to reports, Walmart-owned Flipkart is also looking to foray into the e-pharmacy space which at present has over 50 platforms providing services to nearly 22,000 pin codes across the country and employing over 30,000 people. It is apparent that from Amazon to Reliance, major players have entered the e-pharmacy race to scale up, consolidate and corner a share of the online pharmacy market, which is expected to witness an exponential growth due to the people's preference to get their medicines at their doorsteps. Of course, the nation's fledgling e-pharmacy market is brimming with activity with the entry of billionaires like Jeff Bezos and Mukesh Ambani.

Another factor that is proving to be a tailwind for this sector is the changing pattern of spending of the people on medicines. Medicine spending in India is also expected to grow between 9-12 per cent over the next five years. The price war and availability challenges in the unorganised traditional pharma retail, rising government support including that the e-pharmacies were classified as an essential services during the pandemic and schemes like Arogya Setu App, Digital India and NDHM promoting e-pharmacies and enhances ease of doing business, also acted as growth drivers to the e-pharmacy segment. There is also a large untapped potential in tier II and tier III cities, which can be catered by investments for improvement of logistics channels. Definitely, e-pharmacies have a bright future and will continue to boom in the Indian markets. Factors such as rise in internet penetration, investments and medicine spending, improvement in supply chain logistics, digital payments infrastructure and legal/regulatory framework, measures to ensure data safety and sale of authorized drugs, all these will help this sector to witness a robust growth in the country in the coming years.

All said and done, there are several challenges for this fledgling sector like cyber threats and data security, need for constant technological upgradation and need for strong legal and regulatory framework. At present, the legal regime governing the offline sale of pharmacies is also applicable to e-pharmacy. The government should establish a special legal framework for e-pharmacies to protect the interests of the consumers and to serve as a backbone in facilitating growth in this sector.

(The author is freelance journalist with varied experience in different fields)