Drug retailers plan co-operative

The 550,000 unorganised drug traders in the country are readying to take on the entry of corporate houses like Anil Dhirubhai Ambani Group, Godrej and multinationals Juling Pharma, Cardinal health and Boots Alliance in the Rs 45,000 crore (Rs 450 billion) domestic drug distribution and retail business by metamorphosing into a corporate entity, modelled like the dairy major, Anand.

A joint co-ordination council meeting of the All India Organisation of Chemists and Druggists, the umbrella organisation of various state-level drug retail and wholesale associations in India, held this week in Mumbai, has given the final green signal to set up an umbrella company - All Indian Origin Chemists and Distributors Ltd - and 30 drug distribution companies in states within two years.

The meeting also approved the blue print of the project prepared by Ernst & Young, consultants appointed by the AIOCD. AIOCD Ltd will act as an umbrella company, mainly co-ordinating the activities of direct sourcing of drugs from companies, logistics and trade pacts with the industry.

The company will start with Rs 25 crore (Rs 250 million) equity, mobilised through Rs 10 per share issued to the members of various state-level organisations. The issue will start within a few weeks. Already, two state-level companies, All Kerala Chemists & Druggists Company Ltd and Maharashtra State Chemists and Druggists Association Ltd, are ready to take off. About eight state-level companies and AIOCD Ltd will start operations by January 2008.

Further, the AIOCD has initiated computerisation of pharmacies in India, starting with a pilot project for 1000 medical stores in Thrissur district, Kerala, in association with the Chennai-based IT company Medi-Infotech.

The prime aim of the network is to bring in a uniform pricing structure for drugs in all the AIOCD-led medical shops. With a common software, the traders will also get the latest drug data and trade developments. The project will be implemented in all the medical shops in India in two years.

The AIOCD has also floated a joint venture with Medi-infotech - AIOCD Pharma AWACS - for market surveillance and to generate authentic trade data on a national level in the lines of ORG-IMS.

"We are not concerned about the entry of others into the field as it will be difficult for them to penetrate rural markets and replenish stocks at the speed at which we can do. Our medical shops may lack posh infrastructure, but now we are trying to overcome that.

According to the feedback from our members, none of them will become a part of their plans," said A M Mohan, president, AIOCD.

Senior trade sources noted that the business for new comers would be tough without the active support of a large network of experienced drug traders. The AIOCD may boycott the companies that are supplying to the new chains. In the past, corporate retail chains Medicine Shoppee, Subhiksha and their supplier companies had to face the AIOCD's boycott for various reasons.

Anticipating changes, the drug manufacturers are also cautious in signing deals with the new chains. The Organisation of Pharmaceutical Producers of India, a grouping of multinational pharma companies in India, held discussions with the new chains and the AIOCD yesterday, on the 'Emerging trends in drug distribution'.

"The drug trade in India will undergo rapid changes with the entry of corporate players and multinational drug logistics players like Juling. Our understanding of the trade may become irrelevant when the new corporate players start operations and the AIOCD's project takes off. We are observing the developments," said Dr Ajit Dangi, director general, OPPI.