While the Central Government is going ahead with efforts to bring all essential drugs under price control, the pharmaceutical industry and trade is planning to rationalise trade margins for all drugs sold in the country, it is learnt.

At present the traders are offered a trade margin of 8% for wholesalers and 16% for retailers in the case of price controlled drugs and 10% margin for wholesalers and 20 percent for retailers for non-scheduled drugs. In both the categories, trade margins vary from company to company, as some companies offer trade margins inclusive of excise duty and other taxes, while others offer it exclusive of excise duty and other taxes.

The industry and trade are now considering to implement uniform trade margins, at a rate of 10 percent for wholesalers and 20 percent for retailers, inclusive of excise duty, across all categories of drugs. The traders are also supporting the government move to bring branded generics under price control, which could lead the industry and trade to apply the same rate of margins for branded generics, which are now decided on a case to case basis.

The Indian Drugs Manufacturers Association (IDMA) and the Organisation of Pharmaceutical Producers of India (OPPI), the leading two pharmaceutical associations in the country, are actively considering this proposal from the All India Organisation of Chemists and Druggists (AIOCD), sources said. Representatives of the three associations discussed the proposal at a joint meeting, last week. IDMA and OPPI informed AIOCD that they have to discuss the details with their members and would give a feedback soon, sources told Pharmabiz.

Trade sources note that uniformity in trade margins would bring in transparency and lack of complication in finalising trade margins. Due to the present non-uniform margin system, confrontation between trade and industry has become quite common, including boycott of companies by the traders. Further, there are allegations that some wholesalers are not passing on the right margins to the retailers, citing complications in calculating the margins. Trade has also noticed that some of the companies are manufacturing drugs at excise free zones and are pushing the product to the trade, posing as drugs manufactured at units in other areas of the country. This causes traders to suffer in such cases. These anomalies could be resolved by enforcing a uniform trade margin for all drugs, the joint meeting had discussed.

The trade and industry is likely to wait till the announcement of the Pharma Policy -Part B, mainly on price control, for further pursing the move. The trade is also supporting the industry demand of increasing the abatement of from 40 percent to 45 percent and reduction in excise duty from 16% to 8%, said sources.