Confronted with unfavourable market conditions, several decades old wholesale drug distributors in Coimbatore, Salem and Erode are closing down their business. According to them extended credit period taken by hospitals and retailers, soaring expenses and the emergence of chain stores are the major reasons for downing the shutters.

The wholesalers are facing tough times because of various market issues and threats. One of the major threats is the demand of too much of credits, and the delay in payments being made by the retailers. In addition to this, big companies are appointing too many stockists in the same area. This is causing extension of credit period and helps the retailers to ask for too much of discounts. All these factors force the distributors to withdraw from the market, said a group of traders from Coimbatore district.

According to the Secretary of the Coimbatore Zone of Tamil Nadu Pharmaceutical Distributors Association (TNPDA), in the last ten years more than ten distributors in the district have shut down their business. The same number of traders in the districts of Salem and Erode have also disappeared from the scene.

The closure of four decades old, DSV & Sons, a wholesale distribution agency in Coimbatore, has virtually shocked the entire trade in the district. Another distributor, Sreenivasan & Nandakumar, a 25-year-old agency stopped its business last year. Twenty year old Meena Agency has changed hands because of unfavourable conditions. Fifteen year old Maruthi Pharma and twenty years old Prabha Medical Stores have also bid goodbye to the market.

"Our margins are very limited. We have to hold paid-up stocks of 35-40 days sale value. Besides, we are forced to give credit for 60 days to the retailers and hospitals, and discount of three to six per cent. We cannot survive in the industry," said M Ramakrishnan, secretary of TNPDA, Coimbatore zone.

While speaking to Pharmabiz he said so many threats are emerging day by day which includes the soaring working cost, shortage of manpower, growth of chain distributors and the rising expenditure for maintaining the infrastructure facilities. Hence it entails huge investment for starting a new dealership and new entrants into the trade is almost nil.

Big companies are appointing many distributors and sales representatives in cities like Coimbatore. This adversely affects the business of the existing distributors. The emergence of chain distributors like Medplus and Apollo Pharmacy is creating another headache to both distributors and retailers, he said.

In the districts of Coimbatore, Salem and Erodu, there are about 300 registered wholesale distributors in the fray. In Coimbatore and Nilgiri alone, the number of retailers comes around 3000, where as in Salem and Erode it is about 4000, the TNPDA secretary said.

When contacted the office-bearers of TNPDA in Chennai said that many distributors have already closed their businesses and some others are on the verge of closure.