The representation is given by the South Chemists & Distributors Association (SCDA), which states that the proposed acquisition must be rejected by the CCI
PharmEasy’s acquisition of Thyrocare, which has a wide presence in the diagnostics market, would give the company an unfair advantage, the SCDA said
Not only did the SCDA label pharmacies illegal, it also claimed that the only reason they introduced pharmacies is because they offer discounts
Healthtech unicorn PharmEasy’s proposed takeover of Thyrocare, which is subject to regulatory approval, is likely to be challenged by a group of chemists and druggists before the Competition Commission of India (CCI). It is represented by the South Chemists & Distributors Association (SCDA), which states that the planned takeover of Thyrocare Technologies by PharmEasy must be rejected by the CCI.
In the representation to which a copy of Inc42, the SCDA claimed that pharmacies are not legal under Indian law and that the proposed takeover must therefore be rejected. It also claimed that PharmEasy’s acquisition of Thyrocare would result in dominance by API Holdings. The SCDA is a registered association of distributors and retailers of pharmaceuticals and prescription drugs in South Delhi.
In the overall transaction, 92% of Thyrocare would ultimately be acquired by PharmEasy’s parent company API Holdings through multiple transactions. The IHK has not yet taken up the topic.
The SCDA claimed that API was involved in drug retailing, wholesale delivery and distribution, pharmacy and pharmaceutical distribution management, and more. The acquisition of Thyrocare, which has a wide presence in the diagnostics market, would give PharmEasy an unfair advantage, the chemists and druggists claimed. PharmEasy raised $ 350 million this April at a $ 1.5 billion valuation to become a unicorn.
Not only did the SCDA label pharmacies illegal, it also claimed that the discounts offered by PharmEasy and others are the only reason for pharmacies to launch. Strangely enough, the group did not name any platform other than PharmEasy in this objection. There have been serious concerns about the tendency of venture capital funded e-commerce platforms to abuse market conditions and engage in anti-competitive practices. It is also said that like most e-commerce platforms, pharmacies are not making a profit.
Inquiries to PharmEasy remained unanswered at the time of publication. We will update the article with the company’s responses as soon as we receive them.
Are Online Pharmacies Illegal Under Indian Law?
Recently, Reliance and Tata have also made big cash takeovers in the pharmacy space, and with CCI clearing the Reliance and Netmeds deal last year, pharmacies are unlikely to be illegal. Tata Group is awaiting CCI approval for its 1MG acquisition.
PharmEasy parent company API Holdings (API), founded in 2015, aims to establish a significant presence in the entire value chain of outpatient healthcare for consumers and pharmacy companies through services such as teleconsultation, diagnostics, drug delivery and pharmaceutical supply chains. The parent company operates brands such as PharmEasy, RetailIO, DocOn, with PharmEasy being the consumer-oriented brand. In addition to Thyrocare, PharmEasy also merged with Medlife, which was officially released in May of this year.
Thyrocare was founded in 1996 by Dr. A. Velumani, a former scientist at the Bhabha Atomic Research Center (BARC) in Mumbai. The first laboratory was set up in Byculla, Mumbai, with an initial focus on thyroid testing. Today, it claims to be the country’s largest diagnostic provider in terms of volume – with over 110 million tests performed annually. The diagnostic chain has a network of over 3,330 collection centers in more than 2,000 cities in India. It operates a central processing laboratory, two zonal processing laboratories and 13 regional processing laboratories across the country.
Although the SCDA has claimed that pharmacies are illegal, it should be noted that PharmEasy retail sales are made possible through a network of trading partners. There is no law directly prohibiting the sale of drugs on the Internet, but the law relates to a license to sell drugs. Like other online pharmacies, PharmEasy uses registered retailers for its drug delivery business, which was stated as an essential service by the Home Office during lock orders last year.
According to a FICCI report, the The gross volume of the epharmacy market more than doubled over the course of the year Covid embargo mid-2020. However, India has yet to get an official pharmacy policy or regulation, even if telemedicine and remote consultations are required to some extent on paper. It remains to be seen whether online drug delivery will be merged with other e-commerce verticals in the upcoming e-commerce directive due to be announced in Parliament shortly.