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Organised drug retail would not affect chemists say experts

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The entry of corporates into organized drug retail would not affect the sector estimated to be around Rs 45,000 crore shared by some 550,000 traders nor would it displace the neighbourhood chemist, say experts.

“With the entry of corporates and organized retail trade, margins will get rationalized. Role models have already been established by companies like Medicine Shoppe, Apollo Pharmacies, Dial for Health, Health and Glow, Guardian Healthcare, Himalaya and Global Health Line,” said Dr R.D. Joshi, Director, Business Processes, Interlink Healthcare Consultancy.

He said Department stores and Malls will also set up pharmacies as a result of market forces, regulatory requirements and consumer demand and pharmacy retail trade will get professionalized.

“The organized Pharma retailing will emerge as a sizeable business. It may attract the attention of Venture Fund Companies,” said Dr Joshi.

With the liberalization of health insurance products and growth of pharmaceutical industry alongwith increased spending capacity of the middle class, the organized retail trade which currently covers just 2% of the market, will cover almost 60-70% of the total market. It will develop new business models to partner with the neighbourhood chemist. The growth rate, currently estimated around 6-8% may increase to 15-16%, he said.

However, pharma retailing would be facing a number of challenges and these include inadequate trained human resources, strong challenge to survive and grow in tough competition, said Dr R.B. Smarta, Managing Director, Interlink Healthcare Consultancy.

He said Indian pharma retailing is at an inflexion point with consumption by the Indian population expected to take a higher growth trajectory.

The way Fast Moving Consumer Goods (FMCG) and other retailing have grown in India irrespective of grocers, perhaps the same would be the case for small and unorganized pharma retailers, he said.

“Either small retailers need to upgrade them into in-between identities as it happened with tripartite arrangements in hospitals or they will have to lift themselves upto semi-organised or merged into organized entities,” said Dr Smarta.

Dr Joshi felt the practice of storing and selling non-pharma items alongwith the Pharma items will change shortly as World Health Organisation (WHO) India office has published a Good Pharmacy Practice (GPP) Training Manual to assist the community pharmacies in the country to adopt Modern Day Pharma Practices to improve their profession.

The government is also planning to tighten the norms of transporting, storing and selling medicines in the country.

The proposed good distribution practices would make it mandatory for every retail pharmacy to issue computerized receipts, employ full time pharmacist who could guide the consumer to cheaper alternatives in case the prescribed drug is not available. These proposals are being discussed between the Ministry of Health and the Ministry of Chemicals and Fertilizers, Dr Joshi said.

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