The announcement of Union Chemicals and Fertilisers Minister Ram Vilas Paswan's plan to fix margin for generic drugs, will not have any serious impact in the pharma trade and it may trigger a healthy trend in the trade practices, according to the All India Organisation of Chemists and Druggists.

Welcoming the decision, AIOCD spokesman said that cap for trade margins for the wholesalers at 15 per cent and retailers as 35 per cent for the generic drugs was a suggestion from the Organisation itself. AIOCD has submitted the memorandum to the minister in a meeting held on February 21.

The generic drugs, which are not ethically promoted, are mostly procured and dispensed by the nursing homes, private practitioners and small dispensaries in rural areas and a considerable part of profit is passed on to them. And the trade faces an allegation of huge profiteering from generics, sources from the Organisation said. They said that the new decision will protect the traders from these false allegations.

The margin on these generic drugs is 15 percent for the wholesalers and 40 to 50 per cent on average chelan for the retailers, at present, according to A M Mohan, president, AIOCD. According to Mohan, though a small section of retailers may find hard to cope up with the new decision, the organization will try to help them.

"The new proposal will create a healthy trend for the trade and all the members were happy to agree with our suggestion to implement the fixed margins, when this was discussed in our meeting. After all, the size of the market for such generics is only about seven percent of the total volume of market in the country and we were being accused of making profits unethically through the generics brands," Mohan told Pharmabiz.

Meanwhile, sources from Tamil Nadu Pharmaceutical Distributors Association (TNPDA) commented that the trade is neither gaining, nor losing anything by the decision. "According to our understanding, the regulation is for generic-generics, which comes around five to seven percent of the total market size. Very few chemists market products in this category, which excludes the majority of the ethically marketed branded generics" according to a trade source. As the decision may affect sales of some drugs like nimesulide and omeprezole, the traders in Tamil Nadu may not be affected much. The size of the generic-generic market is around merely around two per cent here.