Indore: Reframe trade margin, says All-India Organisation of Chemists and Druggists

The framing of trade margins has not been done since 1995, but cost of operations has increased by 150-300 per cent: Singhal

Staff ReporterUpdated: Wednesday, May 25, 2022, 10:17 PM IST
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Medicines | Representative Photo

Indore (Madhya Pradesh): The All-India Organisation of Chemists and Druggists (AIOCD) has demanded that the government increase the minimum trade margin of 10 per cent for wholesale dealers on price to retailers and 20 per cent for retailers on MRP. The association claimed that restructuring of the trade margin had not been done since 1995 even as the cost of operations had been increased from 150 per cent to 30 per cent during this period.

The memorandum given by the association to NPPA chairman Kamlesh Pant raised various demands, which also included the demand for a clear definition of generic medicines and their margin.

According to general secretary of AIOCD Rajiv Singhal, the drug distribution and dispensing business is subject to meeting day-to-day operating expenses and fixed costs. A substantial increase in such expenses as rent/real estate, wages to qualified persons, electricity, licence fees and others have taken place and the government must consider all of those while framing the trade margin.

“We’ve made various demands to the government from time to time, but many of them have fallen on deaf ears. Now, it is the need of the hour that the government take a decision in framing new trade margins as it has become tough to run our business with increasing inflation and competition,” Singhal said.

‘Restructure with immediate effect’

‘Bureau of Pharma PSUs of India (BPPI) provides a blanket 20 per cent margin on MRP on all drugs to the Jan Aushdhi Kendra, along with provision of incentives based on monthly purchase. The government has understood the practical requirements and has provided a reasonable margin. If they understand the problems of PSUs, they must work on our problems, too, and restructure the margins with immediate effect’

— Rajiv Singhal, general secretary of AIOCD

Other issues raised by AIOCD include:

1. Government should provide a clear margin on all generic drugs of 35 per cent to retailers and 15 per cent to wholesalers.

2. Retail margin on non-scheduled medicines should be tangent to scheduled medicines and a little more, that is, 20 per cent (16 per cent on scheduled medicines) need clear provision in Drug Price Control Orders.

3. Generic medicines should be defined by the government.

4. The ceiling price formula in DPCO 2013 was ambiguous, leading to controversies; AIOCD had already submitted amendments to remove confusion. AIOCD appreciated the NPPA’s 42 cancer drugs price capping formula. AIOCD demands a similar formula for scheduled/ non-scheduled drugs.

5. Reinstate the definition of authorised stockist.

6. Unethical competition posed by big corporates by discount offers beyond margin limit, has created a threat to the existence of small pharmacies. Government should curb such practices and a certain professional standard is expected.

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