Trade organization CAIT (Confederation of All India Traders) has demanded market regulator SEBI (Security and Exchange Board of India) to reject e-pharmacy company PharmEasy’s IPO proposal, as selling drugs online is illegal in India. In a letter addressed to SEBI chairman Ajay Tyagi, CAIT general secretary Praveen Khandelwal said that PharmEasy sold medicines over the internet in violation of a 2018 order of the Delhi High Court.
The letter stated that a contempt court case is still pending against the company.
CAIT noted that the Union Ministry of Health had said in an affidavit before the Delhi High Court that online sales of drugs were still pending and that the Drugs & Cosmetics Act 1940 does not provide for online sales of drugs. This means that the company, CAIT claimed, was selling drugs without a license, as no such licensing scheme or facility exists under current laws and regulations.
CAIT also pointed to alleged discrepancies in the information provided by PharmEasy owner API Holdings in its DRHP (draft red herring prospectus). In the letter, CAIT claimed that despite the lack of an injunction from the Competition Commission of India for API Holdings’ acquisition of pathology lab Thyrocare, the company has listed it as their subsidiary in DRHP, filed with SEBI.
API Holdings had proposed to acquire Thyrocare, but CAIT said no order had been taken by CCI in this regard. The company had even sent a reminder to CCI, but the final order had yet to be awaited.
CAIT warned SEBI that if API Holdings’ IPO were approved, it could put investors’ money at risk.
According to Business Insider, PharmEasy aims to raise Rs 6,250 crore through its upcoming IPO, and could use the funds to repay its outstanding debt of Rs 1,929 crore.
However, this is not the first time CAIT has complained to the government about PharmEasy. Earlier in March, the trader’s body had written a letter to Trade and Industry Minister Piyush Goyal, Health Minister Harshvardhan and Defense Minister Rajnath Singh about violation of the rules by PharmEasy. It had said that e-commerce pharmacies were hindering the trade of lakhs from small drug stores and pharmacies by offering large discounts to consumers.
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