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Initiate action against Unethical and illegal business practices in e-pharmacy trade: CAIT to MOC
925/1, Naiwala, Karol Bagh, New Delhi-110005.
Phone: +91-11-45032664, Telefax: +91-11-45082665
E-mail: firstname.lastname@example.org Website: www.cait.in
25th August, 2021
Ref. No.: 3272/1/50
Shri Piyush Goyal
Hon’ble Minister for Commerce
Government of India
Dear Shri Piyush Goyal Ji,
Subject: Unethical and illegal business practices in e-pharmacy trade
While expressing our gratitude to you for taking the issue of cleansing e-commerce trade in India and the subsequent consultations held with the stakeholders recently by DPIIT, we crave leave to invite your kind attention towards unethical and illegal business practices of r-pharmacy companies which runs contrary to the provisions of The Drug & Cosmetics Act,1940 and undertaking predatory pricing at a high level with a sole aim to control and dominate the drug and medicine trade currently being run by lakhs of chemists and medicine resellers in the Country.
In this context, we invite your kind attention towards e-pharmacies like Pharmeasy, Medlife,lMg, Netmeds (now owned by Reliance Group), Amazon (foreign company owned by Amazon.com), Flipkart (owned by foreign company Walmart) which are operating on rock bottom prices with 30%-40% discount and free shipping because of the capital dumping in these e-pharmacies by foreign behemoths. This practice of capital dumping can prove extremely detrimental to the sustenance and future of the industry because e-pharmacies have their limitations and last mile connectivity and emergency provisioning is ensured by brick-and-mortar retailers who in turn also provide livelihood to millions of retail pharmacies, their families and employees.
Mushrooming of e-pharmacy is causing huge hardships to the retail chemists and distributors in the wake of anti-competitive practices like capital dumping and deep discounting leading to predatory pricing. Brick and Mortar medicine retailers including retail chemists and distributors are the first points of contact for needy patients across the country. E-pharmacies with their financial backing by large foreign players/funds have started disrupting brick and mortar retailers due to the unmatched and often unsustainable pricing.
The pandemic has been especially hard for brick-and-mortar pharmacies that operate on thin margins and the capture of customer base by e–pharmacies is only adding to the distress. As soon as die markets started reopening in October 2020, after the lockdown, e-pharmacies like Pharmeasy and Medlife indulged in deep discounting on their platforms by giving a flat discount of 30%. To capture the market even further, an additional cashback of 20% was extended to customers with free shipping. Effectively, this translated to a whopping discount of around 40%-45% with free shipping.
Predatory Pricing is done with the sole intention of eliminating the market competition. E-pharmacies are indulging in predatory pricing immediately after the lockdown by offering a 25% discount on medicines and an astronomical 75% discount on wellness products, a market that had begun expanding in the wake of the COVID-19 pandemic. While even a 25% discount on medicines is capable of distorting the market, a 75% discount on a market that had just begun to swell up is daylight robbery since it not only erodes the customer base of traditional retailers but also creates an unhealthy competition, one that is unsustainable in the long run.
By using consumer data which is otherwise not available to traditional players, e-pharmacies like Pharmeasy & Medlife (owned by Dbarmil Setb and investment from Temasek etc) and 1Mg (Prasbant Tandon, investment from Sequoia and now slated to merge in Tata Group) have offered a minimum discount of 30% at the start of the month and approximately 40% discount at the end of the month to cater to the analysis and resultant trend that spending reduces end of the month. It is important to note that the sale of prescription drugs and medicines through online mediums is illegal. The legal regime, under Drugs & Cosmetics Act, 1940, does not permit home delivery of prescription medicines for which a prescription “in original” is required.
We, therefore, request you to please immediately look into the matter and order for investigations of the e-pharmacies including the above-mentioned c-pharmacy companies and take necessary steps to protect lakhs of chemists and medicine re-sellers’ trade.
Thank you. With kind regards
National Secretary General
Confederation of All India Traders