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Single pharma store makes 40 lakh to 1 cr/year.
Challenges for a retail drug store,
Right starting stock to keep.
Medicines are generally divided into two categories
Prescription - no visibility of demand
OTC - demand patterns are clear
Fill rate of inventory - if the medicines are not available, buyer will look for it elsewhere. A typical neighborhood store keeps around 30K SKUs.
Price sensitive customer - discount market. Customers are now looking for discounts.
Seasonality based fill-rates eg, higher demand for certain medicines during flu season.
26% margin for a pharma company, RX plus OTC combined.
Meeting with VK- Kandasamy Vairaperumal - MedplusLearnings from one of the largest offline retailer
Manufacturing to customer - FMCG is well formed compared to pharma.
Manufacturer-CFA-Distributor-Retailer, after distributor before 2009 was difficult to track. Associations and other regulatory constraints.
Every city will have 2-3 providers for the entire city.
No distributor now is functioning without an ERP, not necessarily SAP/Infor but local companies.
Need to track the batch as per legal requirement. Drug inspectors can ask for 3-5 year old records.
With batch, MRP and Expiry is fixed.
Retailers while billing back to distributor, there is no way to determine which distributor’s inventory is with the retailer.
There is no further analytics runs at distributor end to monitor above problem.
Two levels of checking at large distributors - also use barcodes.
Wellness Forever - video on YouTube.
In-house solution to manage their warehouses. SAP, Microsoft, Oracle were unable to meet dynamic requirements of Medplus.
Actual application of barcode on strips is a big issue. Hides the already small, unreadable print.
Dont want to waste money on barcode as it is very expensive. Doing it for exports and not for India due to cut-throat competition.
Using machines to barcode strips in certain locations like Kolkata.
Time to market gets affected due to barcoding. Regulation will make it happen in India.
CFA works on a very thin margin.
Unless it is on the strip, it is not useful.
400,000 products in the master.
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40 percent margin for pharma companies - 2% return does not matter too much
Learning from one of the largest pharma CFA company
There are about 4-5 lakh SKUs. 2-4K pharma companies.
CFA were there to save CST. Post GST loosing relevance.
Serialization has to happen at manufacturing level. Serialization is the only solution.Industry is full of herd mentality. All copy cats. Crack couple of clients, rest will follow.
There are about 400 billing softwares (used by retailers and distributors). Top pharma companies and MNCs use SAP). Be open to integrate with them.
Also integrate with HMS (hospital management systems). 10-15% market is there.
Auto replenishment – we should pitch auto replenishment. This is what pharma companies want and want to hear.
Sales force cost is 10% of revenue. Anything to make them efficient or cost go down will make direct impact on bottom-line.
Additional Information on Supply Chain MRP Breakup
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