Traders’ body CAIT (Confederation of All India Traders) has demanded market regulator SEBI (Security and Exchange Board of India) to reject the IPO proposition of e-pharmacy company PharmEasy, reasoning the sale of medicines online is illegal in India. In a letter addressed to SEBI Chairman Ajay Tyagi, CAIT national general secretary Praveen Khandelwal said that PharmEasy was selling medicines over the internet, violating a 2018 order of the Delhi High Court.
The letter said a case of contempt of court was still pending against the company.
CAIT noted that the Union Health Ministry in a sworn affidavit before the Delhi High Court had said that the online sale of medicines was still under consideration and the Drugs & Cosmetics Act 1940 had no provision of online sale of drugs. This implies that the company, CAIT alleged, was selling medicines without a license as there is no such licensing scheme or provision under the current rules and regulations.
CAIT also pointed towards alleged discrepancies in the information provided by PharmEasy owner API Holdings in its DRHP (draft red herring prospectus). In the letter, CAIT alleged that despite no order from the Competition Commission of India for API Holdings’ acquisition of pathology lab Thyrocare, the company has listed it as their subsidiary in DRHP submitted to SEBI.
API Holdings had proposed to acquire Thyrocare, however, CAIT said that no order was passed by CCI in this regard. In fact, the company had even sent a reminder to CCI but the final order was still awaited.
CAIT cautioned SEBI that if API holdings’ IPO was approved, it could put investors’ money at risk.
According to Business Insider, PharmEasy is aiming to raise Rs 6,250 crore through its pending IPO, and might use the money to repay its outstanding debt of Rs 1,929 crore.
However, this is not the first time that CAIT has complained about PharmEasy to government authorities. Earlier in March, the trader’s body had written to Commerce and Industry Minister Piyush Goyal, Health Minister Harshvardhan and Defence Minister Rajnath Singh, alleging violation of rules by PharmEasy. It had said e-commerce pharmacy companies were hampering business of lakhs of small medicine retailers and chemists by offering deep discounts to consumers.
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