Over 60 drug manufacturers have agreed to increase trade margins of wholesalers and retailers on price controlled medicines after a series of talks between various industry bodies and All India Organisation of Chemists and Druggists (AIOCD). AIOCD had to initiate talks with the industry bodies as Department of Pharmaceuticals (DoP) has been hesitant to restore the old trade margins by amending DPCO 2013.

Says Suresh Gupta, general secretary, AIOCD, "We look forward to getting an increase in the trade margin from over 90 companies for which talks are still going on."

AIOCD office bearers made a representation on October 25, 2013 to NPPA to address the demand of the trader community to get the trade margin of 20 per cent and 10 per cent for retailers and wholesalers respectively. After the meeting with the AIOCD representatives and the industry, NPPA directed the trade body to come out with a consensus on the issue within a period of one month.

As per the list released by AIOCD, amongst the big pharma companies which have agreed to offer higher margins include Blue Cross, Franco Indian, Delcure Lifesciences, RPG Lifesciences, Systopic Laboratories Pvt Ltd, Cipla Ltd, Torrent Pharmaceuticals Ltd, Mankind Pharma Ltd, FDC Ltd, Hetero Healthcare Ltd, Indoco Remedies Ltd, Macleods Pharmaceutical Ltd, Eris Lifesciences, Medley Ltd, Emcure Pharmaceuticals, Zuventus Healthcare, Jenburkt Pharmaceuticals, Morepen Laboratories Ltd, Molekule Lab, Merck Ltd, Neon Laboratories Ltd, Wallace Pharmaceuticals Pvt Ltd, Ranbaxy Laboratories Ltd, Lupin Ltd, Alkem Lab Ltd, Helios Pharmaceuticals, Apex Lab and Troikaa Pharmaceuticals Ltd.

Stockists and retailers have been arguing that their margins have come under severe pressure after implementation of  the new price control order. Industry associations and trade bodies across the country also maintain that the government must look for ways to compensate stockists adequately. The new price control mechanism had earlier led the retailers to refrain from buying stocks of essential medicines leading to inconsistent supply of medicines in the market.

The DPCO 2013, which came into effect from May, 2013 reduced the trade margin on essential medicines, while increasing the span of price control. Under the earlier DPCO, 1995, retailers and wholesalers were entitled for a minimum margin of 16 per cent and eight per cent, respectively, on controlled medicines. And on drugs outside price control, retailers were allowed a minimum margin of 20 per cent, whereas wholesalers were entitled a margin of 10 per cent.

However, with the new DPCO in place, retailers and wholesalers have taken a double hit. More drugs have come under the scheduled category, whereas margins are lower. Also, the margins are squeezed from 16 per cent to 13.79 per cent for retailers and from eight per cent to seven per cent for wholesalers. Besides, the new DPCO also prescribes a different formula to calculate the margins.