Ahmedabad: The Central government may soon introduce trade margin rationalization and the Gujarat pharmaceutical industry believes it will affect their market. The central government may bring down prices of widely used medicines by this move and fix margins for wholesalers, distributors and retailers in a phased manner. This will affect smaller companies significantly, because they have higher margins than marketing companies, wholesalers and retailers, as they do not spend on marketing on their own.
The department of pharmaceuticals and the National Pharmaceutical Pricing Authority are preparing a proposal for trade margin rationalization. It is expected that margin cap fixing will begin in cancer and some chronic diseases. Indian Drug Manufacturers’ Association (IDMA) president Viranchi Shah said, “The government wants to fix trade margins to ensure customers do not pay very high prices compared to the prices wholesalers or retailers pay. This will bring down prices of medicines.”
Trade margin is the difference between the price at which a manufacturer sells the product to a wholesaler or distributor and the price a consumer pays (MRP).
However, small companies say this move will hurt them because big companies do their marketing on their own and add that cost to their selling price to wholesalers, so their selling price is higher. Small Scale Indian Drug Manufacturers’ Association (SSIDMA) secretary Atul Shah said, “There is a trade practice where small manufacturing companies give their stock to marketing companies or wholesalers at lower rates and all marketing expenses are done by marketing company or wholesaler. Small companies follow the Propaganda Cum Distribution (PCD) model. So, the retail price for both, the small and big company will remain the same.”
FacebookTwitterInstagramKOO APPYOUTUBE
