Most drugs sold in India are branded generics or basically copy-cat drugs (of a certain patented molecule) sold under trade names. Generic-generic medicines do not carry this trade name. They are sold cheaper (almost 50-90 per cent cheaper) as they do not incur the promotion and marketing costs like their branded generic counterparts.
Gaurav Jain, vice-president, corporate ratings, Icra, says that even as the number of Jan Aushadhi stores has grown rapidly in the past few years, these stores are yet to achieve the scale that pharmacy retail stores have in the country. "In comparison to 600,000 or more drug retail stores in India, the Jan Aushadhi stores are only a few thousands in number at present," he explains.
Meanwhile, the Jan Aushadhi Yojana has made a strong progress in recent years. CLSA highlighted that under new CEO Sachin K Singh, a large state-of-the-art warehouse had been opened in Chattisgarh to resolve availability issues, whereas medicines were now being procured only from public-sector undertakings (PSUs) and WHO cGMP (current good manufacturing practices) companies. These medicines were also tested at a NABL-accredited laboratory to address perceptions related to the quality of drugs. Drugs would then be dispensed to distributors in various states. They, in turn, would supply them to retailers (franchise model, fixed 20 per cent margin). The government now conducts doctor camps for creating awareness about the quality of medicines.
Singh, the CEO of Bureau of Pharma PSUs of India, is in the process of setting up regional warehouses. "Dispensing of medicines is now done through a reputed integrated transport logistics company," the CLSA report said.
"The Mumbai store we visited last year has doubled the prescriptions handled daily since then. While Jan Aushadhi has made a strong progress over the past year, it will need continued improvement in supply chain and quality of drugs while providing more incentives to franchise partners in the initial years to become a real concern for major India-focused pharma players," CLSA noted.
The Mumbai store has doubled its prescription count to 400 a day over the past year. Chronic illnesses (such as blood pressure and diabetes) continue to see a good pick-up and the availability of drugs has also increased over the past year. "Apart from lower and middle-income group and retired people (with 60 per cent repeat customers), the store is seeing footfalls from certain upper-class customers as well," CLSA claimed.
Large pharmaceutical firms feel that if the quality parameters and assurance levels are brought up to the level of branded generics, Jan Aushadhi medicines would find it difficult to retain their affordability. "India is too large a country for generic-generic to become a part and parcel of our medical culture. Physicians would tend to prescribe those medicines where they are sure of the efficacy. Quality improvement would come at a cost for generic-generic manufacturers and the supply chain, and then they might lose the affordability factor," said a senior executive of a large pharma firm who did not wish to be named.
He further elaborated that marketing and promotion costs make up 10-15 per cent of the overall spend by a pharma company. "The major expenditure comes from cost of goods. Also, to maintain a robust supply chain (for example, a cold chain to ensure full bio-availability of a molecule till it reaches the distributor), is a major cost for branded generic players."
The first Jan Aushadhi store was opened in November 2008. At present, Jan Aushadhi has a list of over 700 medicines (covering almost all major therapeutic groups such as antidiabetic, cardiovascular system, respiratory system, genital-urinary system, central nervous system, anti-neoplastic and immune-modulating agents, etc) and 154 consumables.
Jan Aushadhi Yojana is a government initiative to promote quality generic-generic drugs at affordable prices
There are over 4,000 such stores across the country now
Industry insiders are of the opinion that proliferation of generic-generic stores is unlikely to emerge as a challenge for branded-generic players in the near term as quality assurance remains a pain point
Most drugs sold in India are branded-generics or basically copy-cat drugs sold under trade names
Generic-generic medicines do not carry this trade name.
They are sold cheaper (almost 50-90 per cent cheaper) as they do not incur the promotion and marketing costs like their branded-generic counterparts