Post GST & new pharma policy, changes in pharmacy landscape likely

 E Kumar Sharma   New Delhi     Last Updated: September 7, 2017  | 22:14 IST
Post GST & new pharma policy, changes in pharmacy landscape likely

It is quite unlikely that the Indian pharmacy distribution network with close to 50,000 distributors will remain unchanged. The talk within the pharmacy space is that post the introduction of Goods and Services Tax (GST) which has done away with the need for other taxes, such as inter-state octroi, things could change. Many expect to see a reduction in the number of distributors for instance. One of the triggers for this could be companies now wanting to rationalize the number of distributors. Instead of having one in every city and every region in a state, some may opt for much lower number. It could, in some cases, be down to very few spread across, north, south, east and western India. Today, the number of distributors varies from one company to another and typically could be around 1000 distributors for a company. Another factor that could change the landscape is the impact on account of change in the nature of business itself. For example, analysts point out that given that some of them could be those that have traditionally run their business on cash. Now, they may find the transition into a post GST world challenging and this may lead to consolidation.

But then, the story may not be the same at the retailer-front, which in many cases, may be small family-led businesses that engage in not just pure pharma products but also into sale of FMCG products. In fact, the argument is that since the draft pharma policy, which is now being circulated within the industry circles for feedback, may see new entrants into the field. The triggers for this again could be two-fold. One, since there is greater emphasis on sale of generic medicines, pharmacies, as against medicine-producing companies , may now have a greater say in which medicines 'to sell', a more important factor for retail being the attractive margins. Even at 10 per cent, it still is an attractive retail space to be in and that too, as one analyst put it, with minimal risks. While time will tell how exactly the landscape will transform, there is little doubt that it will see changes.

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