The chemists and druggists in Tamil Nadu are finding it difficult to survive due to mounting competition within the trade following mushrooming of drug stores and for a host of other reasons like generic drugs, direct marketing, lack of incentives etc., say industry sources.

Talking to Pharmabiz.com, N Anandan, Hon. general secretary and PL Veerappan, Treasurer 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 at a rate of 100 to 200 new shops every year, causing severe competition between the medical shops.

Most of the medical shops are forced to sell the drugs at very lean margins, as a nearby competitor may sell the same drug for a good undercut in prices.

The association has a membership of over 25, 000 registered members spread in the 26 districts, including 9000 stockists and represent about 95 per cent 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, Trichy etc.

Besides, entry of established supermarket-pharmacy chains like Subhiksha, which offers drugs at 10 per cent 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 cheaper drugs are further compounding their woes. Now numerous brands are available for the same drug, and customers are well-informed of choosing their brands, often referring to 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.