The High Court's division bench, comprising Justice M Satyanarayanan and Justice P Rajamanickam, passed the order today.
The same bench last month provided temporary relief by suspending the single judge order and today passed its final order in the same matter.
A Ramesh Kumar, senior counsel who appears for Netmeds, one of the companies which had appealed for the stay, confirmed the order and said that while the ban has been stayed by the bench, the single judge's direction to the central government to notify the rule before January 31st remains in force.
The development comes after a group of online pharmacy companies in the country approached the Madras High Court with an appeal against the single judge's order banning online sales of medicines until the government of India implemented new regulations on the matter.
Six online pharmacy companies and a platform formed by the major pureplay online pharmacies had impleaded in the petition filed by the Tamil Nadu Chemists and Druggists Association (TNCDA) before the single judge and most of them today submitted their appeal with the division bench against the order, said sources from Digital Health Platform, the organisation of online pharmacy companies.
There are around 20,000 people working in this sector, in around 10 online pharmacy firms in the country. Around 1.5 million customers purchase medicines online and a ban would impact their lives.
The companies have informed the court, through the appeal, that they are not violating any rules or regulations under the act. There are two types of online pharmacies, one acting as aggregators to connect registered pharmacists and the consumer and the other which have their own registered pharmacists, medicine stocks and sales licenses under existing regulations.
PharmEasy argues that it is an aggregator and works closely with registered pharmacists, who dispense medicine to the customers. The industry is also expecting a new set of rules under the Drugs and Cosmetics Amendment Rules, 2018, for online sales of medicine, to be notified soon.
Online pharmacy firms including 1MG Technologies, Netmeds Market Place, 91 Streets Media Technologies, Medlife International and Practo Technologies were impleaded in the case before the single judge.
Earlier, Justice Pushpa Sathyanarayana had passed an order directing the central government to notify the rules in the Gazette at the earliest, not later than January 31, 2019, in the interest of public and the online drug trade. Under the rules, those selling drugs and cosmetics online, have to obtain licences in the manner prescribed, within a period of two months from the date of such notification
"As the draft rules are framed by the central government, after deliberations including the stakeholders, till the aforesaid rules are notified, the online traders are bound not to proceed with their online business in drugs and cosmetics," said the order.
TNCDA has been arguing that the prevailing regulation has no provisions for selling medicines through online and draft rules for the same is still under consideration, which shows that the current sales of medicines online is not legal. It argued that as per the existing regulation, the prescription drugs could only be sold by a registered pharmacist against prescription and only from the premises for which the license has been issued by the drug regulatory authority.
From a market size of $12.6 billion in 2009, the Indian pharmaceutical market is expected to grow to $55 billion by 2020, with the potential to reach $70 billion in an aggressive growth scenario.
ResearchAndMarkets.com estimates that the e-pharmacy market potential is worth over $ 1 billion with global and domestic industry giants like Amazon, Flipkart, and more than 30 startups trying to grab a slice of the pie. The Indian e-commerce industry is expected to grow at a CAGR of over 20 per cent, crossing the $ 3 billion mark by 2024. The online prices are around 10-20 per cent lower than the price of drugs and cosmetics sold by brick and mortar stores.