Stung by the drastic cut in prices of about 350 drugs following the Drug Price Control Order, pharma retailers have urged the industry to give them a fixed margin of 20 per cent and stockists and distributors 10 per cent.
The Order has led to a drastic decline in margins and it is difficult to operate at this level, said the All-India Organisation of Chemists and Druggists in a communication to the Government and drug-makers.
The retailers said that their gross average margins fell to 14-16 per cent and that of stockists to 8.5 per cent. “After operational expenses, we are left with just 3-4 percentage points and stockists with 2 percentage points,” S. Shinde, President of the apex body representing about 7.5 lakh chemists and druggists, told Business Line over phone after its recent meeting.
The meeting in Mumbai two days ago took place following the Centre’s intervention on October 25 asking the industry and the retailers to discuss the issue and resolve it amicably.
Next meeting on Nov. 20
The industry was represented by the Indian Pharmaceutical Association and other associations. The next round of talks will be held on November 20.
The retailers argued that they had never asked for revision of margins in the last 20 years though the inflation rate had zoomed.
The industry is also keen on arriving at an amicable solution as this would free it from supply-chain related issues that have impacted sales in the last two months.
According to Saumen Chakraborty, Chief Financial Officer, Dr Reddy’s, things have been improving at the industry level. “Ì understand that the Government has also assured them of support,’’ he said.
P. Bhaskara Narayana, Chief Financial Officer, Natco Pharma, said there was no problem on the distribution front. “I don’t see any shortage of essential drugs at the moment,’’ he said.