Amazon runs into controversy in India

Amazon runs into controversy in India

The online pharmacy business in the country is poorly regulated, yet the multinational giants wants in, as many are seeking medical advice online as opposed to in-person.

Amazon has announced plans to launch its online drugstore in India, beginning with a trial in Bangalore. The service includes prescription medicines, over-the-counter drugs for common ailments like coughs and colds, and healthcare devices such as glucometers and blood pressure monitors.

A 2019 report from the research firm Frost & Sullivan estimated that the Indian pharmaceutical industry would increase from more than $29 billion in estimated revenues in 2019 to $55 billion in 2020 and comes on the heels of Amazon’s acquisition of online pharmacy startup PillPack in 2018.

The push into India comes just as the COVID-19 pandemic is encouraging people around the world to order their medications and seek medical advice online as opposed to in-person. “This is particularly relevant in present times as it will help customers meet their essential needs while staying safe at home,” an Amazon spokesperson said in a statement to the media. Yet it may be a tough market for Amazon to crack. Within a few days of the announcement, The All India Organization of Chemists & Druggists, an industry group that claims to represent hundreds of thousands of retail pharmacies and distributors, drafted a letter to Amazon CEO Jeff Bezos and Amit Agarwal, an Amazon executive based in India.

“We are writing to you as we came to know that has decided to enter ‘Online Pharmacy’ space, probably oblivious to the fact that the E-Pharmacies are illegal and not recognized by the laws under Drug & Cosmetic Act & Rules there under,” the letter dated August 14 reads. “This space has been marred by extreme controversies, court cases and legal issues in the last few years.”

A slew of online pharmacies in India have emerged in recent years, but laws and regulations have been ill-defined and have been subject to broad misinterpretation by market players. In the past few years, retail pharmacies have organized strikes to protest online pharmacies, claiming that these businesses could put their livelihoods at stake. Groups like The All India Organization of Chemists & Druggists have argued that allowing pharmacies to sell medicines online will result in misuse and overuse of medications. Some studies have uncovered sales of counterfeit medicines for sale on online pharmacies in India. Because of these challenges, making a successful play into the online pharmacy space requires “deep pockets” and a “long-term commitment,” said Vinod Melvani, president at Pharma Channel Consulting, a research and consulting firm, recently.

Despite these challenges, the pandemic may have moved the needle for a player like Amazon.

“There are macro trends that would suggest there’s a growing need for online pharmacy in India,” he added. Yet Amazon will also face competition from online pharmacy services already active in India despite the confusion over regulation, such as 1mg, whose CEO Prashant Tandon has said his company is working with the government to move towards a “good regulatory mechanism” for the space, which could open up investment.


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