The Subhiksha experience is a reflection of the power wielded by the All India Organisation of Chemists and Druggists (AIOCD), the Mumbai-headquartered association of pharma wholesalers, stockists, distributors and retailers that decides who can be a part of the pharmaceutical supply chain in India. It issues discretionary no objection certificates (NOCs), creating, in the process, one of the toughest pharma retail markets in the world.
...The pharma supply chain in India has multiple layers of suppliers, middlemen and retailers. Apart from distribution, costs are another important element in this price-sensitive market. Pharma companies appoint carrying and forwarding (C&F) agents for every state, sometimes more than one for large states such as Maharashtra and UP. They move products to at least one stockist or wholesaler in smaller cities, who then pass them on to neighbourhood medical shops, many of which are owned by wholesalers.
Organised pharma retail has grown in three waves. In 1999-2000, chains such as Lifesprings, Subhiksha, Medicine Shoppe, and Health and Glow stirred the market. Some have grown, others closed, yet others stagnated. Dial for Health, CRS, 98.4, Guardian Life and Medplus led the second wave. This year, three large groups have heralded fresh hope: the Ranbaxy-promoted Fortis Healthworld, Manipal Cure and Care and, most recently, Reliance Wellness. None are members of AIOCD but accept whatever discount wholesalers and distributors give them for the volumes they lift.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.