23-06-2012, 01:49 PM
Pharmaceutical Distribution in India
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The Indian pharmaceutical industry is continuing
its high growth rate at 13% for
the last six years. From foreign control, to
domestic grass-roots growth, the Indian pharmaceutical
segment has evolved over the last
three decades. According to BioPlan Associate’s
recent report, Advances in Biopharmaceutical
Technology in India, the Indian pharmaceutical
industry has the potential to reach $25 billion
by 2010.
Pricing and margins
The prices and the margins of
drugs for the wholesaler and retailers
are largely decided by the
National Pharmaceutical Pricing
Authority (NPPA), which varies
depending on whether the active
constituent of the product is a
scheduled drug or a nonscheduled
drug. Scheduled drugs are pricecontrolled
whereas nonscheduled
drugs are not. The NPPA is an
organization of the government of
India established to fix or revise
prices of controlled bulk drugs and
formulations. Companies must
keep drug prices affordable to the
general public. To keep medicines
within reach of the poor population,
the government has covered
76 scheduled drugs.
The Future of India’s
Di stribution Systems
Organized Retail
Organized retail pharmacies are in
a nascent stage in India, but have
started making inroads in the distribution
system. The first retail
pharmacy chain was started by
the Subiksha Retail Services Pvt
Ltd.
Long-Channel Inventory Management
The multilayered distribution channel
and lobbying at all layers has
been successful at preventing pharmaceutical
companies from bringing
in significant reforms toward
higher trade margins, and at bypassing
the multiple distribution layers
to reach customers directly. Because
pharmaceutical companies do not
have direct access to retailers’ data
on sales (tertiary sales), most pharmaceutical
companies depend on
stockists’ sales data to monitor sales
(secondary sales).
IT Adoption
IT adoption in healthcare has
grown drastically. Pharmaceutical
companies have realized the need
for integrated solutions in SCM to
keep inventories at optimum levels,
to improve distribution, to provide
for liquidation of stock, and
to streamline interconnectivity
between manufacturing facilities,
warehouses, and CFAs in different
states.
Brand Substitution
The emergence of generic drugs
has also taken a toll on Indian
pharmaceutical company sales, as
prices can be almost 2 to 15 times
less for the same drug. Moreover,
to capture market share generics,
companies offer higher trade margins
at the retail level. Sometimes
generic drugs provide up to 500%
trade margins, which is a lucrative
offer for a retailer to pass up, and
this leads to brand substitution.