CAIT alleges business model of PharmEasy as "entirely based on gross illegality"

Traders' Body Confederation of All India Traders (CAIT) has written to the Security and Exchange Board of India (SEBI) urging the market regulator to dismiss the IPO proposition of e-pharmacy company PharmEasy.

CAIT has reasoned that the sale of medicines over the internet is not allowed according to an order passed by the Delhi High Court in 2018.

CAIT has alleged that the business model of PharmEasy is "entirely based on gross illegality". The traders' body has pointed out many discrepancies in the DRHP (draft red herring prospectus) of API Holdings, the parent firm of PharmEasy.

In the letter addressed to SEBI Chairman Ajay Tyagi, CAIT national general secretary Praveen Khandelwal wrote that PharmEasy has been selling medicines via the internet in violation of the Delhi High Court order of 2018.

CAIT also wrote that the Ministry of Health and Family Welfare in a sworn affidavit before the Delhi High Court had noted that the online sale of medicines was still under consideration of the government. It added that the Drugs & Cosmetics Act 1940 and Rules 1945 had no provision for the online sale of drugs.

CAIT has alleged that PharmEasy has been selling drugs without a license as there is no provision for any licensing scheme under the current rules and regulations.

The traders' body also noted that API Holdings proposed to acquire pathology lab Thyrocare a few months ago, however, the Competition Commission of India (CCI) had passed no order concerning the acquisition.