E-PHARMACY STARTUPS IN INDIA- LEGAL COMPLIANCES &

REQUIREMENTS

I. OVERVIEW

“E-Pharmacy” means business of distribution or sale, stock, exhibit or offer for

sale of drugs through web portal or any other electronic mode. 1 Current status
of the laws governing the sale of drugs and medicines in India doesn’t
distinguish between the ‘offline mode’ i.e. selling through the brick-and-mortar
retail stores and ‘online mode’ through a web portal.

While the e-commerce business comes under the domain of the Information
Technology Act, 2000, the legislations governing the sale of drugs in India
comes within the ambit of the Drugs and Cosmetics Act, 1940, The Drugs and
Cosmetic Rules, 1945, The Pharmacist Act 1948, The Indian Medical Act,
1956. However, the legislations mentioned neither permits nor prohibits online
sale of medicines in India.

Further, vide Circular2 dated 30th December 2015, the Joint Drugs Controller
clarified that The Drugs and Cosmetic Rules, 1945 don’t distinguish between
the conventional and over the internet sale/distribution of drugs. However, the
provisions of the aforementioned rules have to be complied in both cases.
Therefore, the existing legal framework governing the sale of drugs and
medicines through the retail stores are also applicable for the legal governance
of e-pharmacies.

1
http://egazette.nic.in/WriteReadData/2018/189043.pdf
2
Circular No 7-5/2015/Misc/e-governance/091 available at
https://cdsco.gov.in/opencms/opencms/system/modules/CDSCO.WEB/elements/download_file_division.jsp?
num_id=NjA5
 II. EXISTING FRAMEWORK

The Drugs and Cosmetics Act, 1940 regulates the import, manufacture,
distribution and sale of drugs and cosmetics in India. Chapter IV of the Act
deals with the manufacture, sale and distribution of drugs and cosmetics. Part
VI of The Drugs and Cosmetic Rules, 1945 governs the ‘Sale of drugs other
than Homoeopathic Medicines’ and Part VI-A governs the ‘sale of
Homeopathic Medicines’. The rules broadly describes the different types of
licenses issued by the licensing authorities, conditions to be satisfied before a
license is granted, duration of licenses and also provides for cancellation and
suspension of licenses under certain circumstances.

Further, Guidelines3 For Grant of Licences for Sale of Drugs Under Drugs &
Cosmetics Act, 1940 and Rules thereunder provides in detail the ‘Types of
Licences issued by the Department for sale of Drugs’ as well as documents
required for issue of the above license which is given hereunder:

A. Different types of licence required for the sale of drugs (the required
number of application form for a particular licence is mentioned in the
bracket) are given hereunder:-
 Licence on Form 20 is issued for the sale of Allopathic drugs by retail
other than those specified in Schedule C, C(1) and X. (Form-19)
 Licence on Form 20-A is issued for the sale of restricted Allopathic
drugs by retail other than those specified in schedule C, C(1) and X.
(Form-19A)
 Licence on Form 20-B is issued for wholesale of Allopathic drugs other
than those specified in Sch C, C(1) and X. (Form-19)

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http://drugscontrol.delhigovt.nic.in/wps/wcm/connect/doit_drug/DoIT_Drug/Home/Procedures+For+Obtaini
ng+Licences/
 Licence on form 20-C is issued for sale of Homoeopathic medicines by
retail. (Form-19B)
 Licence on Form 20-D is issued for sale of Homoeopathic Medicines by
wholesale.(Form -19B)
 Licence on Form 21 is issued for retail sale of Allopathic drugs specified
in Sch C & C(1).(Form-19)
 Licence on Form 21-B is issued for wholesale of Allopathic drugs
specified in Sch C & C(1). (Form-19)
 Licence on form 21-A is issued for retail sale of restricted Allopathic
drugs specified in Schedule C (I). (Form-19A)
 Licence on Form 20-F is issued for retail sale of drugs specified in Sch.
'X'. (Form-19-C).
 Licence on Form 20-G is issued for wholesale of drugs Specified in Sch.
'X'. (Form-19-C)

B. Documents required for Fresh Application of Retail/Wholesale license :

 Online fee deposit receipts.
 Application Form No. 19/19A/19B/19C as applicable (System
Generated)
 Site plan and key plan of the premises.
 Constitution of the firm viz: Memorandum and articles of association and
Copy of resolution Passed, in case of company. Partnership deed, duly
attested by Notary Public, in case of partner-ship firm. Trust deed, in case
of trust / society.
 Photo ID proof of proprietor / partner / director of the firm.
 Affidavit regarding non-conviction of Prop./Partner/Director as well as
the firm under Drugs & Cosmetics Act, 1940.
 Affidavit regarding compliance of MPD 2021, if the premises are located
on DDA residential flat / plot /building
 Conversion charge receipt issued by MCD with relevant documents in
support of commercial use as per MPD 2021 viz; copy showing the
Name of notified commercial / mixed use road/street.
 Affidavit from the Regd. pharmacist/competent person (System
Generated).
 For Retail Sale Registered Pharmacist:
o Proof of qualification i.e. final degree certificate / provisional
certificate with mark sheets.
o Registration of Delhi Pharmacy Council,
o Appointment Letter and Bio-data
 For Wholesale Licence Competent person:
o Proof of qualification i.e. final degree certificate / provisional
certificate with mark sheets
o Experience Certificate,
o Appointment Letter and Bio-data.
 Premises: a) If Owned: either Regd. Sale Deed / Regd. GPA /
Conveyance Deed in the name of owner, or Un regd. Sale Deed / un
regd. GPA supported with Electricity Bill / Water Bill / property tax
receipt.
b) If Rented: Rent Receipt and either Regd. Rent Agreement, or Un
registered Rent Agreement along with ownership documents of landlord,
as stated above.
* In case of village, Khasra Khatauni documents will be considered.

C. Procedure and conditions for obtaining a drug license in India:

Rules and regulations pertaining to Drug License are governed by the

Food Safety and Drug Administration Department of the concerned
State Government. Application for the Drug License is filed online,
along with the payment of government fee as prescribed as per Rule 59.
The scanned copy of all documents is uploaded at the time of filing the
 application. On receipt of the application, the Drug Inspector shall
personally visit the shop to verify the documents and correctness of
provided information. On successful completion of the inspection,
Personal Interview is conducted by the Inspector or such competent
person and upon verification of all information and documents furnished
is correct, the Controller of drugs issues the Drug License. Rule 64 and
Rule 65 of The Drugs and Cosmetic Rules, 1945 provides the conditions
for obtaining a drug licence. Conditions to be satisfied before a license is
granted with respect to the minimum area of the pharmacy and storage
requirements is given hereunder:

 For area of Pharmacy Shop

1) The carpet area of the Pharmacy must be a minimum of 10 square
meters.
2) When you have applied for both retail and wholesale pharmacy the
minimum area should be 15 square meters.
3) The premises are required to be adequately ventilated.
 For storage facility of drugs
1) Medicines need to be stored at a clean, ventilated and cool storage
facility.
2) When in certain drugs cases and certain vaccines need to be stored in a
low-temperature freezing zone or as required, it must be stored that way.
3) A refrigerator and air conditioner by default are essential for grant of a
Drug License in India.

III. DRAFT RULES, 20184

On 28th August, 2018 the Ministry of Health and Family Welfare vide
notification published in the Official Gazette, issued the draft rules whereby it
proposed to insert Part VI-B namely ‘Sale of drugs by E-Pharmacy’ in The
4
http://egazette.nic.in/WriteReadData/2018/189043.pdf
Drugs and Cosmetic Rules, 1945. The said notification further invited the
suggestions and objections from various stakeholders. However, till date the
said draft rules have not been notified in its final form in the Official Gazzete.
Important rules under the said draft rules are discussed hereunder in detail:

 Registration of E-Pharmacy- Rule 67 L of the draft rules provide that

any person who intends to conduct business of e-pharmacy shall apply
for the grant of registration to the Central Licensing Authority in Form
18AA through the online portal of the Central Government accompanied
with a fee of fifty thousand rupees. Rule 67J makes the registration of
the e-pharmacies mandatory. A registration issued to any person shall
remain valid for a period a three years from the date of its issue and is
also renewable.

Rule 67N provides that the central licensing authority after scrutinising
the information and documents furnished by the applicant and after
being satisfied that the provisions of Part VI-B are complied with, shall
grant registration to the applicant. If not, it shall reject the application
within a period of thirty days, and record the reasons in writing for
doing so. The applicant so aggrieved can file an appeal to the Central
Govt. within forty-five days from the date of receipt of such rejection.
The rule also provides that if the deficiencies in the application are
rectifiable, the licensing authority shall inform the applicant who shall
further rectify them within a reasonable period.

Further, Licencing Authority may refuse to grant registration to any

applicant in respect of whom it is satisfied that by reason of his
conviction of an offence under the Act or this Part, or the previous
cancellation or suspension of any licence granted thereunder, he is not a
fit person to whom a licence should be granted under this rule.
 Conditions Of Registration Of E-Pharmacy- The draft rules
prescribes certain conditions to be complied by the registration holder
post grant of the registration. These conditions are given in Rule 67M
and 67S as follows:
a. An e-pharmacy registration holder shall comply with provisions
of Information Technology Act, 2000 (21 of 2000) and rules
made thereunder.
b. The details of patient shall be kept confidential and shall not be
disclosed to any person other than the Central Government or the
State Government concerned, as the case may be.
c. The e-pharmacy portal shall be established in India through
which they are conducting the business of e-pharmacy and shall
keep the data generated localised: Provided, that in no case the
data generated or mirrored through e-pharmacy portal shall be
sent or stored, by any means, outside the India.
d. An e-pharmacy registration holder shall not carry out e-
pharmacy with respect to the drugs covered under the categories
of the Narcotic and psychotropic as referred to in the Narcotic
Drugs and Psychotropic Substances Act, 1985 (61 of 1985),
tranquilizers and the drugs as specified in the Schedule X of
Drugs and Cosmetics Rules, 1945.
e. The supply of any drug shall be made against a cash or credit
memo generated through the e-pharmacy portal and such memos
shall be maintained by the e-pharmacy registration holder as
record.
f. No e-pharmacy shall advertise any drug on radio or television or
internet or print or any other media for any purpose

It is important to point out here that in the draft rules proposed drugs
specified in Schedule X of the Drugs and Cosmetics Rules,1945 are
prohibited to be sold by the e-pharmacies. However, as per the current
 regime, the same is allowed as the rules at present does not distinguish
between the offline and online mode of selling of drugs and cosmetics.

 Operative Structure Of E-Pharmacy and Procedure for sale and

distribution of drugs- The draft rules also provides the basic structure
as to how an e-pharmacy shall operate. It states that the e-pharmacy
registration holder shall receive the orders for retail sale through e-
pharmacy portal and shall arrange or provide the drugs from any retail
or wholesale licenced premises under the Drugs and Cosmetics Act,
1940, as per the prescription received from the customer, within the
period specified by the e-pharmacy registration holder at the time of
placement of the order through e-pharmacy portal. Rule 67P further
provides that on receipt of prescription, the registered pharmacist on
behalf of the e-pharmacy registration holder shall verify the details of
the patient, Registered Medical Practitioner and arrange for the dispense
of the drugs as per the instructions of the Registered Medical
Practitioner, if not already found dispensed;
The e-pharmacy shall also have a facility for customer support and
grievance redressal of all stakeholders which shall run not less than
twelve hours for all seven days of a week: Provided, that the facility for
customer support shall have registered pharmacist in place to answer the
queries of customers through such customer helpline. The e-pharmacy
shall mention the following details on its e-pharmacy portal, -
a. registration issued in Form 21AA;
b. constitution of the firm including details of the Directors, partners
or persons having ownership of the E-pharmacy;
c. official logo of the e-pharmacy portal, if any.
d. details of the logistic service provider;
e. return policy of dispensed drugs;
f. name of the registered pharmacist, with the Regd. No. and name
of Pharmacy Council where the pharmacist has been registered,
 who validates the prescription prior to forward it to dispense the
drugs;
g. contact details of e-pharmacy including telephone number,
mobile number, e-mail, address;
h. procedure for lodging grievances, complaints etc. on the e-
pharmacy portal and complaint redressal mechanism.
 Suspension or cancellation of registration: On contravention of the
provisions of the Drugs and Cosmetics Act, 1940, the Central Licensing
authority can suspend or cancel the registration, after giving an
opportunity of being heard to the registration holder. The registration
holder may within forty-five days of the receipt of a copy of the order by
such authority, prefer an appeal to the Central Government in the
Ministry of Health and Family Welfare, and that Government, shall after
giving the appellant an opportunity of being heard, confirm, reverse or
modify such order.

 Complaint Redressal mechanism: In the event of suspicion of supply

of a Not of Standard Quality or adulterated or misbranded or spurious
drug through e-pharmacy to any customer, that customer may file a
complaint to the State Drugs Controller, in that State Licensing
Authority. Thereafter, that State Drugs Controller shall take action as
per the procedure specified in the Drugs and Cosmetics Act, 1940 and
Rules made thereunder to decide the complaint of the customer. The
customer also has a right to seek relief under the Consumer Protection
Act, 1986 without prejudice to his remedies under the Drugs and
Cosmetics Act, 1940.

IV. E-PHARMACY MODELS

1. Inventory-based Model of e-Pharmacy
Inventory-based model of eCommerce means an activity where the
inventory of goods and services is owned by the eCommerce company
 and the products are sold to the customers directly. Similarly, in e-
Pharmacies, the e-Pharmacy owns the inventory of medicines / drugs
that are stored in warehouses / fulfilment centers across geographic
locations. Once orders are received by the ePharmacy on its website /
app, they are checked by the registered pharmacist. Orders which
require a prescription are checked for a valid e-prescription / scanned
prescription uploaded by the consumer on the website. Medicines /
drugs are not dispensed without a valid prescription. Registered
pharmacists wrap the medicines in a tamperproof pack and deliver them
to customers through a courier service.

2. Marketplace-based Model of e-Pharmacy

Marketplace-based model of eCommerce means that the technology
companies act as a facilitator between a buyer and a seller. In this
model, the e-Pharmacy plays the role of an aggregator. It provides a
technology platform that connects the buyers and sellers of medicines.
The e-Pharmacy website empanels licensed pharmacies and lists their
products. Consumers select the medicines / drugs available on the
website / app. The e-prescription / scanned prescription is uploaded on
the website / app. The order is passed on to the licensed pharmacy. The
pharmacy verifies the order against the prescription and then prepares
the order. The orders are cancelled in the absence of a valid prescription.
The medicines are then delivered to the customers through a courier
service.

3. Generic eCommerce Marketplace:

Generic eCommerce marketplace is a technology-driven electronic
platform where a wide variety of products like electronics, fashion,
furniture, home furnishings, and cosmetics are sold. This model
prohibits the advertisement and sale of prescribed drugs or any drugs,
 which are in violation of the Drugs & Cosmetics Act. Examples of this
marketplace are Flipkart and Amazon.

V. EXISTING PLAYERS IN E-PHARMACY

1. 1mg:
 Inception: 2014
 Founders: Prashant Tandon, Vikas Chauhan, Gaurav Agarwal
 Based in: Gurugram
 Parent Company/Vision: The venture was launched by the name
‘Health kart Plus’ as a part of the Health kart family which
focuses on health and nutrition.
 e-Pharmacy Model: Market place-based model

1MG delivers prescription medicines and drugs to Indore, Bhopal and

Ahmedabad. It also delivers prescription drugs to Delhi – NCR region,
and all major cities in Maharashtra, Karnataka, Rajasthan, Tamil Nadu,
Telangana, Uttar Pradesh and West Bengal. 1 MG has expanded through
acquisitions. In 2015 it acquired a web platform for homeopathic
medicine to expand its reach in Ayush medicines. In July 2016 it
acquired acquired Medd.in, a diagnostics and imaging tests marketplace.
In 2016 it acquired MediAngels to offer consultations, corporate health
services and insurance partnership. In 2017 it acquired Dawailelo, run by
DL Lifecare Private Limited which helps users connect with medical
stores, doctors and pathology labs through its website and app. It has tie
ups with laboratories like Thyrocare, 1mg labs, SRL labs and ,
Metropolis.

2. CareOnGo:
 Inception: 2015
  Founders: Ritu Singh, Aditya Kandoi and Yogesh Agarwal
 Based in: Delhi
 Parent Company/Vision: ZotikDelhi a sister concern of
CareOnGo, is India's first and largest e-distributor of medicines
and general wellness products. It aims to be a is a one-stop
destination for one's pharmacy procurement needs.
 e-Pharmacy Model: Inventory based model

CareOnGo services are available only in a few parts in the country. In

the northern part of India the services is available in Delhi, Noida,
Gurugram, Ghaziabad and Faridabad. The other regions CareOnGo
services are available are in Bengaluru, Hyderabad and Kolkata. It aims
to be a one-stop destination for one's pharmacy procurement needs. It is
an aggregator for all distributors. Zotik a sister concern of CareOnGo
has partnered with more than 150 brands to provide a seamless one-stop
procurement platform to all its partner retailers.

3. Medlife:
 Inception: 2014
 Founders: Tushar Kumar and Prashant Singh
 Based in: Bengaluru
 Parent Company/Vision: Tushar Kumar, son of Prabhat Narain
Singh, one of the founders of Alkem Laboratories
 e-Pharmacy Model: Inventory based model
 Delivery Time: 24-48 hours. Express delivery (2 hours) has
recently been started.

Medlife supplies medicines Pan India. The most popular cities from
which it receives orders are Bengaluru, Mumbai, Kolkata, Delhi,
Chennai, Hyderabad, Pune, Ahmedabad, Indore, Allahabad, Durgapur,
Faridabad, Agra, Kanpur, Ghaziabad, Gurugram, Gwalior, Howrah,
Rajkot, Jabalpur, Jaipur, Bhopal, Kharagpur, Lucknow, Noida, Surat,
 Vadodara, Thane and Varanasi. Patients can take consultation
appointments for doctors in Bengaluru. It also offers e-consultation,
laboratory services, app-based healthcare-related services, private label
generics and ayurvedic brand to become an integrated healthcare service
provider with a pan-India presence. Medlife has also expanded by
adopting the franchise model.

4. Myra:
 Inception: 2015
 Founders: Faizan Aziz and Aniruddh Coontoor
 Based in: Bengaluru
 Parent Company/Vision: The founders wish to make medicines
accessible at the time of need and also ensuring quick and timely
delivery.
 e-Pharmacy Model: Inventory based model
 Delivery Time: 1 hour

As of now Myra operates only in Bengaluru and Mumbai but plans to

expand to other cities. It has its own automated warehouses.

5. Netmeds:
 Inception: 2012
 Founders: Pradeep Dadha and Bruce Schwack
 Based in: Chennai
 Parent Company/Vision: In 1914, the Dadha family ventured into
pharmaceutical retailing business and entered into drug
manufacturing in 1972. The manufacturing unit, Tamil Nadu
Dadha Pharmaceuticals, was later merged with Sun Pharma in
1996. The Group sells drugs in wholesale in Kerala and retail in
Tamil Nadu. It has now ventured to the online model.
  e-Pharmacy Model: Inventory based model

Netmeds supplies medicines all over India. It has fulfillment centers in

Chennai, Bengaluru, Hyderabad, Delhi, Pune, Ahmedabad, Raipur and
Kochi. Netmeds has expanded by acquisitions and by adopting a
franchise model. In 2016 Netmeds acquired Delhi-based hyper local
drugs delivery app Plus. In 2018, Netmeds acquired JustDoc to add
diagnostic and telemedicine services to the already existing delivery of
drugs and medicines. Netmeds is looking to set up offline stores to cater
to tier II, III and IV markets. Netmeds is also looking to strengthen its
technology platform and warehousing facility to boost online sales.

6. PharmEasy:
 Inception: 2015
 Founders: Dharmil Sheth and Dhaval Shah
 Based in: Mumbai
 Parent Company/Vision: The company was started with a vision
to deliver genuine medicines at affordable rates by optimizing the
supply chain and logistics.
 e-Pharmacy Model: Market place-based model

PharmEasy supplies medicines all over India to more than 1000 cities
and towns covering 22000+ pin codes all over India. Popular cities are
Mumbai, Delhi, Kolkata, Pune, Bengaluru, Jaipur, Thane and
Ahmedabad. Diagnostic Test services are available in Mumbai including
Thane, Navi Mumbai, Kalyan and Dombivali, Delhi with Noida,
Gurgaon, Faridabad & Ghaziabad, Chennai, Pune, Ahmedabad and
Gandhi Nagar, Surat, Vadodara, Lucknow, Kolkata, Hyderabad,
Bengaluru and Jaipur. PharmEasy has medicine reminders, medicine
refills (subscription), digital prescription records, free E-Doctor-
Consultation, sample collection from home for laboratory tests and easy
return policy. It has tied up with laboratories like Apple diagnostics,
 iGenetic Diagnostics, Oncquest Diagnostics, SRL Diagnostics, Dr.
Avinash Phadke labs, SRL Diagnostics and Suburban Diagnostics.

Some of the other major existing e-pharmacies in India include Bookmeds,

mChemist, Medidart, , Medstar, Medikoe, Bigchemist, Pluss, Zigy,
Savemymeds, and SaveOnMedicals. Traditional pharmacies like Apollo,
Medplus, 2,4 Guardian lifecare etc also started on-line business in India.