Business Model
• All the players operating in this space are pursuing a marketplace model to sell pharmaceutical drugs. This is due to there being no legal provision for direct online retailing of drugs • These companies carefully curate their local pharmacy partners due to concerns of counterfeit drugs, misuse of customer data, misuse of drugs or poor customer service • For companies that accept orders for non OTC drugs, uploading of prescription slip before ordering is mandatory due to legal reasons
General trends
• Many companies including HealthKart Plus started out as an online database for comparing medicines or finding their generic substitutes before eventually expanding into an online pharmacy • The rate of expansion is very slow and these companies just operate in a handful of locations • Lot of new companies entering this space in the past 3 years • Organized pharmacy chains just one % of the mammoth Rs 60,000 crores drug retail market • Online pharmacy started 2-3 years back, still in early stages with a few players in the market
Lack of well defined regulations
• There are no defined regulations related to functioning of online pharmacies in the IT Act 2000 • In addition, companies can face a penalty of upto Rs. 5 Crore if found indulging in irregular activities under the IT Act 2000 • Due to these reasons, this industry has a very cautious approach by the companies entering it as they have to make sure that they do not find themselves on the wrong side of the law when the eventual guidelines come into place
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Challenges
• Most of the payment gateways don’t accept payment from these companies due to
