Wonderer's Lust

How the Indian Pharma market is different? Part 2

The Indian Pharmaceutical Retailer

In the developed markets the pharmacists main job is to dispense medicines by processing prescriptions. Depending if it is allowed they could be incentivized to substitute the innovator brand for the generic products but that is it. For the OTC products there could also be promotion/purchase aisles.

Indian pharma retailers falls into the following groups-
a) Mom and pop stores that stock medicines as well as OTC and some FMCG products(chocolates, toileteries etc.)
b) Newer shops affliated to some of the growing corporate chains like Apollo and Medplus
c) Captive hospital/doctor shops

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The mom and pop stores are the most common. Indian law demands a registered pharmacist to be there and all drugs to be given only on a valid prescription. The reality is much different.

Firstly, the pharmacy shop owner/staff act like a small doctor themselves dispensing medicines to customers coming with minor symptoms like cough, cold, etc. The customer thinks he has saved the time and money of going to a doctor and the shop does additional business

Secondly, pretty much any medicine can be acquired without a prescription. Minor issues can be procuring narcotic and controlled medicines but when the local police looks the other way even those are available.

Thirdly, the license of the shop is in the name of a pharmacist who may have a dozen shops in his name and is never there. The people who run the shop learn to read and recognize medicine names.

Fourthly , while the retailer gets a margin of 15-20% on all medicines, they are all on the lookout for bigger discounts. These are called offers and could be measures on discount on MRP (say 25%) or free units ( e.g one units free with every 10 units also called a scheme). This sometimes creates a pressure to introduce a scheme to increase secondary sales. This can also create pressures in ensuring availability of new brand with a pharmacist being  not very eager to stocks the 15th brand of a popular molecule say amoxycillin.

Fifthly , each pharmacist is service by the major stockist in the market and pays either in cash or credit for any medicines ordered. In India the number of stockists for a large division can be as much 5000 plus. This brings in an additional layer between the regional CFA and warehouse.

Sixthly, most retailers do a very small volume of business serving small areas through their staff. e.g even 4,000$ of monthly business may be considered very large.

Trends to watch out for among retailers-
a) Increase in large pharmacy chains
b) Increase in inner hospital/doctor captive clinics decreasing the importance of local retailers but adding a profitable revenue stream for the hospital/doctor

Disclosure: I work in the Indian Pharma sector presently with exposure to the the US healthcare and pharma market too. All opinion expressed here is my personal opinion and has no link to my employer.

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