The All India Organisation of Chemists & Druggists (AIOCD) will strongly oppose the government move to cap the trade margin of retailers & wholesalers. The association has warned the government that nothing less than 10 per cent and 20 per cent of trade margins to the wholesalers and retailers respectively will be acceptable to the association and if the government comes out with notification to reduce the trade margins, the supply of medicines to the patients will be severely affected.
“We had a meeting with the government and we have made it clear to the government that minimum trade margin should be 10 per cent to the wholesalers and 20 per cent to the retailers and nothing less than this will be accepted. We are confident that the government will not reduce the trade margin and if the government is planning to do so, we cannot afford it and we will strongly oppose,” said J S Shinde, president, AIOCD.
Recently, a committee was set up under the department of pharmaceuticals (DoP) to study the extent of margins on medicine brands that are supplied to traders and distributors directly and not sold through medical representatives to physicians or hospitals. It was noted that there is a huge difference in mark up margins which are 1000 per cent. The committee has submitted the report and the government is yet to make their final decision.
Meanwhile, the Indian Drug Manufacturers Association (IDMA) in its letter to DoP has suggested that the capping of trade margin on generic drugs would force the retailers to close their business resulting in non-availability of medicines in rural areas. The medicines are available in rural areas due to the generics business model adopted by the big manufacturers. The capping of trade margin will only affect the operations of thousands of SSI/MSME units.
The understanding that if manufacturers can give higher margins in one channel of distribution, the manufacturers are earning super profit, which should be passed on to consumers, is factually wrong. If any step is taken to cap the margins and reduce the price could prove disastrous for the consumers as well as the manufacturers, states IDMA.