Strong wind of change in pharma retail

It’s a revolution waiting to happen. May be its happening little late, but better than not happening at all

For long, we have been going to corner pharmacies and have had varied experiences. There have been umpteen numbers of stories that instead of trained chemists, pharmacies are actually being manned by completely un-trained individuals who have that much link with drugs as Taliban has it with peace! One of my most memorable personal experience has been of buying a serious Rx medicine from a Halwai (Sweet maker)…I mean a sweet maker masquerading as a pharmacist.

Not to forget the menace of counterfeit drugs. It is claimed that 20% drugs sold from pharmacists in India are fake. They are nothing but WMD (Weapon of Mass Destruction).

When we compare with China, which has approximately 2 lakh outlets for a domestic market of $15 billion, the Indian Pharma retail with approximately 5.5 lakh retailers for $8 billion market appears highly over-proliferated with complete fragmentation. Possibly this is the cause of various maladies ailing the pharma retail

Onset of organised pharma retail chains was supposed to address these issues. However, even after many years they have a limited reach. There share is around 3% of Indian pharma market. While in US, top three chains control 40% of the market

Situation may change for better if what AIOCD is attempting actually succeeds. All India Organisation of Chemists & Druggists (AIOCD) has 550,000+ chemists and 60,000 wholesalers as its members. This representative body of chemists is corporatising itself. In a way it is changing its colour. From a trade body with a ‘unionistic’ mindset to a corporate body with a professional mindset. Or think of it this way – 550,000 entrepreneurs coming together to become a part of a single company. And its name will change to AIOCD Ltd. with its corporate office at Mumbai

It will have a complex structure of a holding company with various subsidiaries at the state level. Individual Chemists would be the shareholders and the share capital would be created from their contribution. Creating the legal structure is probably the easier part. Making it work as corporate entity with a definitive revenue would be the tougher part.

The four key service areas for the company would be:
– Organized retailing
– Organized distribution services - single point end to end supply chain services
– Sales & marketing services
– Electronic stock & sales data – branded as AWACS (probably inspired by US!)

To offer these services with high standards, company is banking upon its financial muscle, strong relationship with the government and the industry, and the distribution might (besides 95%+ share of pharma market, close to 30% FMCG sales is controlled by this entity) and the distribution depth (presence right upto district / thesil level)

Company has stuck gold right at the beginning. It has finalised brand promotion alliance with Lupin (for OTC Products), Novartis (for OTC Products), Disney Baby Products, Amar Remedies (for FMCG Products), and Grass Root Nutrition (for OTC/FMCG products) to name a few. Under this arrangement AIOCD Ltd. will actively promote brands from these companies at the retail level

Besides they have finalised distribution alliance with Aventis, MSD, Sandoz, Lotus Sutures, and Amar Remedies. Under this arrangement, AIOCD Ltd. would be the single point contact for these companies for the distribution instead of them dealing with many individual wholesalers. This will help companies with optimal and adequate distribution of their products. AIOCD Ltd. would be able to provide this facility as it will take all the wholesalers under its fold.

To ensure that all these services are functional smoothly without any glitches need is to have a robust IT infrastructure. Towards this end, AIOCD Ltd. has partnered with Siemens for SAP implementation and with IBM as the technology partner. The central server would be located at Airoli (Navi Mumbai)

Probably the big ticket offering from AIOCD Ltd. is its PharmaTrac, branded as AWACS. It would monitor sales & stocks at each of the chemists in a minimal time. The key feature of this product would be speed and accuracy. It will reduce by half the time required to capture the data from each of the chemist, thus giving a more realistic & real time data to the pharma companies. Eventual aim is to provide day data trends to the pharma companies every 10 days. Accuracy would be ensured through personally supervised data collection. Eventually (by late next year), pharma companies would have sales data Rx wise, pin code wise and doctor wise, helping them to do better marketing planning

In the next three years, AIOCD Ltd. expects AWACS to have a revenue generation of Rs 250-300 crore.

The top management of the company led my Mr. Jagannath Shinde is assuring pharma companies that they would offer a thoroughly professionally managed set-up. Whether it will remain a cliché or a welcome new reality only time will tell.

In the meanwhile, for the people the key indicator of change would be to get to interact with a real chemist rather than a make believe one and that too a smiling face.

The task for AIOCD Ltd. is cut-out. For it the challenge is with itself