Supplies of some medicines have dwindled at Kolkata-based chemist A. K. Roy’s store, due to the ongoing feud between drug-makers and retailers over trade margins.

The shortage has been for over two months, he says, since a few distributors boycotted products of companies such as Cipla and GlaxoSmithKline.

As this stand-off between companies and retailers continues, the Department of Pharmaceuticals (DoP) has written to State authorities to ensure that supply of essential medicines does not get disrupted.

If the deadlock continues, the issue could also come under the Government’s anti-competition lens that checks unhealthy market practices, say pharma industry representatives.

In his letter to State authorities, Dilsher Singh Kalha, Secretary-DoP, points out that traders association are insisting on a margin of 10 per cent for wholesalers and 20 per cent for retailers — that they charged when those medicines were not under the ambit of price control. Since the DPCO 2013 (Drug Price Control Order) outlines a margin of 16 per cent to the retailer, manufacturers too are adhering to that trade margin, the letter explains.

Citing letters addressed to manufacturers, he says, the trade association has also asked members not to deal in medicines of manufacturers not agreeing to the 10 and 20 per cent trade margins to wholesalers and retailers, respectively.

However, the All India Organisation of Chemists and Druggists’ J.S. Shinde says they have not asked their 7.5 lakh members to boycott any company.

“The reduction in margins is an injustice to trade,” he said, adding that these benefits were not going to the consumer. Unlike the earlier formula that looked at the cost of production, the revised DPCO takes into account market prices. As a result, drug companies continue to enjoy high margins, he alleged, adding that the small trader suffers. Late last month, some companies, including Cipla, called a truce with the trade, and reverted to the higher trade margin, as the company said, in the interest of patients.

Sales hit

But GlaxoSmithKline’s woes continue. Reiterating its earlier sentiment on the DPCO impact, the company said, “It has come to our knowledge that in the major pockets of the country our products are not being purchased by the trade from September 15, 2013.” Sales will be affected, a company source said, adding that the East and North Eastern markets were particularly hit.

Ranbaxy’s sales too have been affected in parts of the country, the company said, adding that they had received complaints from patients. Similar reports are emerging from others markets too. In Tamil Nadu, medicine supplies are returning to normalcy after two months of shortages in key brands. Tamil Nadu Pharmaceutical Association’s S. Somaskandan says drugs such as GlaxoSmithKline’s heart-related drug Lanoxin, (earlier in short supply) are flowing back into the market. Referring to the trade-drug companies stalemate, he said, over 40 per cent of the manufacturers, mostly Indian, have reverted to the earlier margins, and others were in talks to sort this out.

Truce is being reflected in Kolkata as well. Shortages were not witnessed at Frank Ross Pharmacy, an Emami Group venture. However, “there are many drug companies who have agreed to maintain the old trade margins,” says R K Jatia, Managing Director, Emami Frank Ross.

But a senior executive with a company taking the brunt laments, “Their (traders) margins are getting squeezed, no doubt, but so are ours. We need to work together to ensure that ultimately the patients are not the ones paying the price.”

(With inputs from Aesha Datta, New Delhi; P.T.Jyothi Datta, Mumbai.)

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