In India pharma retailing is a business estimated to be worth Rs 30,000 crore. It is unorganised and unlike in the West it is largely in the hands of traders. 

The Indian pharmaceutical retail is expected to grow at 11 percent CAGR over the next five years. It is estimated to be around Rs 50,000 crore by 2010. Only two to three percent of pharmaceutical retailing is by the organized players. There are around 8,00,000 pharmacies in India today, with about 60,000 distributors distributing to them. The segment is extremely fragmented and has its own set of challenges. Pharma retailing can be segregated into two parts. Chemists form the primary part, while pharma companies also sell medicines through institutions like hospitals. Although hospitals are not classified as such, ultimately the product is being sold at retail. Therefore, pure retailing is at Rs 28-30 crore and institutional sales make about Rs 4-5,000 crore.

Pharmaceutical retailers operate in a world of constant change – challenged by pricing pressures, increasing supply-chain complexity, consolidation, market evolution, and financial volatility. These have led pharmaceutical retail companies to invest in technology solutions that help them track real-time data on customer drug usage, improve compliance, streamline operations and stay ahead of competition.

Pharmacy retailing has seen consolidation world over. 5 pharmacy chains control 40% of the sales in the US. 7 pharmacy chains control more than 60% of the market in UK. A similar situation prevails in most developed nations around the world.

According to the president of Maharashtra state chemists association (MSCDA), Jagannath Shinde it’s a major challenge to drive the  association to shape up into a corporate entity. As more and more business houses plan direct presence in pharma retailing in India, chemists will have to move forward from its traditional past and offer value added services. He further said  the value added service like health insurance, patient counseling, home delivery etc will as part of MSCDA’s new plans.

Top corporates and retail chains like Pantaloons and Apollo pharmacy are expanding their presence into drug retailing. The companies like Subhiksha, Health and Glow, Manipal group and Guardian Lifecare have lined up mega pharma retail plans.

The US based Medicine Shoppe has already branched into more than 100 shops in about six years but it is not been a very easy ride. According to Viraj Gandhi from Medicine Shoppe India will become the 13th largest medicine market in dollar terms but all of the hype in pharma retail is going to be through a minefield – if you can survive you can make money.

For those entering pharmacy retailing it may be a great opportunity but profits may come only after a long gestation period, as the government controls prices and profit margins on medicines and price-based competition is getting tougher by the day.

In India, there are more than 8 lac independent chemists. With so many chemists there is a demand supply imbalance and as there is almost no differentiation, the shakeout is going to be inevitable.

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