A recent report by Vector Consulting Group highlights critical gaps in India’s pharmaceutical distribution, revealing that even leading pharmaceutical companies struggle with brand availability at chemists.
The study, based on a survey of over 900 chemists and 68 stockists across 18 cities, found that pharmaceutical company brands are available at chemists only 60 per cent to 85 per cent of the time. This is despite these companies maintaining high inventory levels, averaging 15 weeks in the supply chain and seven weeks with distributors. The shortfall results in prescribed brands being unavailable at chemists in 10 per cent to 60 per cent of cases, depending on the region.
“Companies are relying on the assumption that having large quantities of stock and working with the bigger stockists in the country ensures availability, but the reality is far different,” said Chandrachur Datta, Partner, Vector Consulting Group. He noted that this results in product obsolescence, expirations, and an annual inventory write-off ranging from 4 per cent to 10 per cent.
The report found that chemists, whether sourcing medicines from wholesale markets or distribution-focused stockists, typically work with a limited number of stockists. These stockists usually focus on specific therapeutic areas from each company rather than carrying the full product range across therapeutic areas. Additionally, stockists serve a limited number of chemists—either those who visit them in wholesale markets or those they selectively choose to service in distribution-focused setups, guided by logistical challenges and credit risk considerations.
This system creates gaps in pharmaceutical brand availability at chemists, as access is restricted to a subset of brands chosen by selected stockists. Since stockists do not serve all chemists in their area, even when a pharmaceutical company supplies products to multiple stockists, no single chemist is likely to have full access to all brands from that company.
“India’s pharmaceutical market is growing rapidly, yet the backbone of its distribution remains fragmented,” Datta said. “Companies are losing significant revenue and market opportunities because their brands are not consistently available where and when they are needed.”
Datta further stated, “This is not just a business challenge; it’s a missed opportunity to enhance healthcare in the country. Pharma companies need to rethink their approach by adopting smarter, more agile, consumption-based restocking systems to ensure better stock availability and prescription fulfilment. By unlocking the untapped potential of their distribution networks, they can resolve these issues and drive sustainable growth.”
The findings indicate a need for change in India’s pharmaceutical sector. The report suggests that optimising distribution strategies could not only improve business outcomes but also ensure a more reliable healthcare experience for millions across the country.