The chemists and druggists in Tamil Nadu are finding it difficult to survive due to mounting competition within the trade. Mushrooming of drug stores in one location, direct marketing to physicians and lack of incentives are some of the reasons for this crisis in the pharma trade in the state.
Talking to Pharmabiz.com, N.Anandan, secretary of the Tamil Nadu Chemists and Druggists Association, said the number of drug stores in the state has increased considerably in the last few years. Nearly 100 to 200 new shops are coming up every year, causing unhealthy competition amongst the trade members.
Medical shops are forced to sell the drugs at very low margins, as the nearby competitor is offering the same drug at undercut prices.
The association has a membership of over 25,000 registered members spread in the 26 districts, including 9000 stockists and represent about 95 percent of trade in the state.
K.Gobirathnam, general secretary of Namakkal District Chemists and Druggist Association says the number of drug stores in a relatively small and backward district like Namakkal, has increased from 385 in 1997 to 487 in 2003, and the growth rate is more in cities like Chennai, Coimbatore, Madurai, and Trichy etc.
Besides, entry of established supermarket-pharmacy chains like Subhiksha, which offers drugs at 10 percent discount, is eating into the business of other drug stores in the state. Subhiksha has 143 stores in Tamil Nadu and Pondicherry, and plans to have 550 stores within the next five years in different parts of the country.
Easy availability of generic drugs and price savvy customers preferring cheap drugs are further compounding their woes. Now numerous brands are available for the same drug, and many customers know the availability of the same drug or brand at a nearby store at a different price.
More than that, the present trend of manufacturers directly marketing the drug to doctors is severally affecting the fortunes of traders.
"It was a three tier system involving manufacturer, stockists, retail outlets and then the consumer. Now many leading companies are directly supplying the drug to doctors with attractive discounts, and they virtually run established drug stores under the guise of schedule K norms, which allow them to keep essential drugs. They supply drugs to their patients at costs marginally less than what medical stores could afford. This is going to kill the trade, unless the Government brings in a mechanism to arrest this trend" said the office bearers.
Besides, lack of incentives from the part of Governments in the case of excise duty and other levies, subsidy for investment costs and electricity bill etc. were further compounding the problems, said the office bearers.