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Pharma Wholesale And Distribution In India
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The whole pattern of pharmaceutical wholesale in india is set for a major change in coming days. Any pharmaceutical wholesaler with valid trade license can directly approach drug manufacturers for his requirement of medicine supplies for selling to retailers. Pharmaceutical wholesalers do not have to depend on stockists or distributors for their supplies any more. So far the pharmaceutical companies used to sell medicine stocks directly to 5000 odd stockists and distributors, they in turn sell the products to 10000 wholesalers and the wholesalers then sell them to six lakh retailers. This trade practise has been existing in the industry for several years and all India organization of chemists & druggists (AIOCD) was directly controlling this arrangement disliked by many pharma companies and patient community. It is possible that the new distribution system will be enforced by other states also shortly. Drug manufacturers are not however happy with the new distribution system as they may have to deal with a large number of Pharmaceutical wholesaler now onwards and that may add to additional costs. The change in the drug distribution system is triggered by recent order by the Competition Commission of India on AIOCD in February last asking it to desist from indulging in and following practices which have been found anti-competitive in violation of Section 3 of the Competition Act.
This situation has forced both pharmaceutical and biotech companies to consider alternate pharma distributors systems. These attempts, however, have faced severe resistance by the lobbies of traders involved in the channel. India is a geographically diverse country with extreme climates that make distribution a critical function. The long channel of pharma distributors and high incidence of brand substitution makes it mandatory for a company to make all its stock keeping units (SKUS) available at all levels at all times in India, most brands have generic versions of drugs and retailers can usually obtain higher margins with generics than for branded products. to reduce risks of substitution, innovator companies must make sure their products are made available to the stockists and retail shops. Pharma distributors in India have witnessed a paradigm shift. Before 1990, pharmaceutical companies used a different distribution system, in which they established their own depots and warehouses that now have been replaced by clearing and forwarding agents (CFAS). These organizations are part of the distribution chain, and are primarily responsible for maintaining storage (stock) of the company's products and forwarding skus to the stockist on request. Most companies keep one to three cfas in each indian state. on an average, a company may work with a total of 25–35 cfas. Unlike a cfa that can handle the stock of one company, a stockist (a regional distributor) can simultaneously handle more than one company (usually, 5–15 depending on the city area), and may go up to even 30–50 different manufacturers. The stockist, in turn, after 30–45 days (a typical credit or time limit) pays for the products directly in the name of the pharmaceutical company. The cfas are paid by the company yearly, once or twice, on a basis of the percentage of total turnover of products.
India's exports of generics have been growing at a rate of 24% per year over the last four years, and are set to continue this "explosive growth," an international conference has been told. India's pharmaceutical exports for 2012-13 totaled $14.7 billion, 55% of which was sold in highly-regulated western markets, according to representatives of the Pharmaceuticals Export Promotion Council of India (Pharmexcil) and the Indian Brand Equity Foundation (IBEF), speaking at the CPhI Worldwide conference in Frankfurt, Germany. The government has set a target for pharmaceutical exports to hit $25 billion by 2016.
For the past 3 years I have been writing informative and high quality articles on pharmaceutical company. In the above article have covered topics such as pharmaceutical wholesaler, pharma distributors, pharmaceutical exporter.
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