Competitive Advantages and Competition Issues: Analysis of E-Pharmacy Market in India​​

Ritika Jain
Research Associate at Competition Commission of India.

Volume IV, Issue I, 2021

With the continuous development in the e-commerce market and medicines being a necessary good, the introduction of the e-pharmacies has proved to be a support and advantageous at the time of global pandemic Covid-19. The utilisation of e-pharmacies by patients is on the rise due to the benefits of privacy and ease. Moreover, there are some competitive advantages in the e-pharmacy market when compared to the brick and mortar system, which suggests the long term presence. The competitive advantage when analysed from Porter’s Model indicates that the cost leadership and differentiation strategies have been adopted by the e-pharmacies instead of focus strategies. The current market situation of the e-pharmacies when compared to the brick and mortar system manifests the development of potential competition issues due to the amalgamation of e-commerce and pharmaceutical market, currently, the two of the most anti-competitive markets in Indian jurisdiction based on the filed information. The paper highlights the competition issues due to the competitive advantages and data availability in the e-pharmacy market. The identified potential competition issues include fixed trade margins, constraints in the supply chain, preferential treatment, the tying arrangement between doctors and pharmaceutical companies, resale price maintenance data masking, and countervailing power. However, the steps can be taken beforehand, such as advocacy, the inclusion of data privacy, sharing of the algorithm used with the government organisations, and keeping track of the contracts in the supply chain to improve the condition of the market.

Keywords:  e-pharmacy, competition issues, competitive advantage, data protection, e-commerce