Retail Pharmacy

Perhaps stars are not favourable for Indian pharmaceutical industry. On one side the vested interests are bent upon to malign the manufacturing industry that provides affordable medicines across the world. The fact that hurts MNCs. On the other side pharmacies are holding the manufacturers and the consumers at ransom, threatening strike every other day and dictating term. It’s painful reality.

The retail pharmacy business dates back to 1860’s. The manufacturing sector emerged in India almost after five decades in mid 1900. Even with the late start the manufacturing sector made a spectacular progress. With government support the manufacturing sector is galloping from 1970 onwards. Ever thought why retail sector could not keep pace with the manufacturing sector? There are many reasons, but just one most important reason has been lack of professional management. Retail never got the right impetus. It lacked professionalism. Unfortunately pharmacy has been an extension of a grocery shop in India and that mentality of owners and consumers hindered its progress. We hardly see any board of Pharmacy. What we see is board of medical and general stores or a chemist. There is tremendous increase in the number of such shops (pharmacies) but there is a lack of quality. There is hardly any pharmacy that can come close to its counterparts even in a nearby place like Dubai. The standards of pharmacies in developed nations are far superior. Unless the mentalities of the pharmacy owners undergo a drastic change, the Indian consumers will always be at receiving end.

One of the most neglected lots of professionals in India is the pharmacists. The poor pharmacy graduates study mathematics and microbiology, pharmaceutical engineering and pharmacology, pharmaceutical management and pharmacognosy, and many other subjects for the graduation. It is a much harder discipline than many other fields, but when they graduate they are offered peanuts by the pharmacies. The diploma holders are not much different. There is a exploitation of this young generation. At many places one finds a ‘qualified person’ is grossly unqualified, but who cares?

The margins for the pharmacies in India are perhaps the best in the world. In addition to medicines the pharmacies indulge in many other activities. Selling talk time of mobile service providers is unique to India. Very often one find a big board of mobile services provider and the name of pharmacy appears in small letters in one corner of the board. Substitution of doctor’s prescription by another product that offers better margin is very common. Some unscrupulous elements also indulge in selling samples. The bonus offers and discount schemes announced by manufacturers never reach the consumers. Some assume a role of clinician and practice medicine. In many places in UP and Bihar, patients are injected by someone in the pharmacy. The pharmacies also make large profits by selling cosmetics and daily necessities, even bread and butter. The claim that pharmacy business is not lucrative is a myth. There are hardly any pharmacies that have downed their shutters. Many of the pharmacies get credit from the wholesalers and do their business with negligible investments in stocks. Date expired and unsold products are replaced by the manufacturer. Pharmacy is one of the most lucrative business in India.

There is greater awareness by FDA. The rules are being implemented. Consumers are getting smarter. There is an increased competition. Availability of more pharmacy graduates and their chances of starting their own business in a professional way and many more reasons make old timers, and the so called leaders in the wholesale and retail sector jittery. The problem is threat to the supremacy of some individuals, unions and associations. All these years the companies are restricted from marketing their products unless they pay large sums to local associations. Unless NOC is obtained, the manufacturer cannot market the product. The word NOC was replaced by word LOC (Letter of cooperation) due to MRTP issues, but the practice still prevails. Long back the chemist association in Aurangabad had decided to restrict number of brands in the market. Just five brands of Ampicillin were allowed in the local market. This practice prevented a local leading manufacturer Lupin from making their Lupilin available in the local market where it was produced. This dadagiri of the chemists association started in early eighties. Sarabhai Chemicals, the leading company in that era had reduced the margins and the association went for boycott of Sarabhai products that lasted for a while. The unity among the pharmacies was about to break. Many of the pharmacies were losing business and were keen to end the boycott. It was the time when Sarabhais decided to go public and had announced their public issue (what we call now as IPO). Fearing the adverse impact on the public issue, unfortunately the management succumbed to the demands of the chemists association. Tiger tasted the blood and eventually became a man-eater. The arm twisting practices by the wholesalers and retailers that started in that era have increased over a period of time. FDA has now stepped in and want the pharmacies follow the rules and provide better service. This is what hurts the leaders who are mentally still in the last millennium. They want to dictate terms on the association members, arm twist them to maintain their supremacy. There has to be end to it.

With the changes that are taking place in the society, and with the diminishing role of family doctors, there is a need for community pharmacists. This is a noble profession, but certain unscrupulous elements are tarnishing the image. Time has come to empathize with the patients, understand their pain and provide them with right medication and advice. The element of social responsibility has to be there. Business ethics must include obligations to the society. There has to be a difference between a person selling paratha for Rs. 200 to a stranded devotee in Kedarnath and the pharmacist. Pharmacists should not hold the consumers and manufacturers at ransom. This is possible only when the pharmacies are managed by professionals and are treated as pharmacies and not as an extension of grocery shops. Running pharmacy should not be a Dhanda, but should be a noble profession. It’s a dignified profession. Act that way, don’t degrade. Will the pharmacy owners realize this and act?

Life begins NOW…..

Every year the months of Jun/Jul assume different importance for me. I see so many of my young friends on the threshold of new life. Life begins for them now. This is the time when the results of MMS and PGDM are announced. FB is flooded with the messages and there is a sense of achievement. Yes, it is an achievement, fulfillment of aspirations. The moist eyes of parents and a affectionate hug of siblings enhance the pleasure of this achievement. But these achievements come with a price. The price that has been paid and the price that is to be paid in future, the uncertain one, the unknown one.

MBA adds greater responsibility. As a management graduate one is expected to perform better than others. The mistakes committed by others may be overlooked, but the management graduates are not expected to commit those mistakes. So better application of acquired knowledge is needed, eye for the details is needed and commitment to excel is needed. The maturity levels attained by management graduates help them to mould themselves. Many of management students ask me a simple question. Why should I do this job now after MBA? I could have done it even without MBA. That’s a very valid question. I feel MBA puts you on a different platform that helps to perform any job better and faster than non MBAs. One develops an edge and then over the years this edge has to be regularly sharpened to get better and better results. Management qualification helps to have a better vision. What cannot be seen, anticipated, visualized by others can be done by management graduates. These skills get developed, this may not be a part of structured syllabus, but it comes without asking. Therefore a job that a graduate can perform will be done much better and faster by a MBA.   

Many of my young friends who started at grass root levels are doing exceedingly well. The zeal for achievement, determination and commitment with a pinch of luck has done the trick. Adaptability to so far not known work culture helps a long way, be it a job or own business. My young friends who chose the less travelled path and used their MBA knowledge are also doing well. Developing websites, selling fruits and vegetables online, starting a fast food joint, venturing in to real estate or interior decoration business or just helping father to do better with existing business are the fields where my young friends have done noteworthy job. Taking risk and going on less travelled tracks helps in the long run. But one has to have patience and has to believe in self. MBA helps in this respect.

The world is changing fast. There are plenty of opportunities. These are to be cashed upon. One has to be proactive. Anticipate what will be needed a year later and work on that today. If one starts working on providing what is needed today, it may be too late. By the time one develops and offers something the needs might change, so work for the future needs and offer desired product at right time. MBA helps you do to this. This applies not only to marketing but to every specialization. HR has challenges to manage knowledge resources, finance has to work in challenging times as world economy is delicately poised, operations and IT will have to operate on higher platforms due to rapid changes in technology. Every field has challenges, every field offers opportunities, and if one has vision then one can see through for others it’s like unscaleble wall. Use your MBA knowledge here.

For all those who failed to get the formal degree, remember it’s not the end of the world. But the knowledge acquired is still there. Knowledge is indestructible. It cannot be destroyed. Apply this knowledge to whatever you choose to do in future. Success is certain. Remember one simple principle, knowledge is an advantage acquired, but this advantage can be nullified if not refreshed. No one should relax, strive to update knowledge every moment, be a student for life time. You will learn to succeed.  

Choose the field that interests you. Your interest will help you perform better. And better performance will propel you for the growth. Guide your future yourself. No one knows you better that yourself, so choose what suits you, what interests you. It’s time to begin, take right step forward.

And a final word. Be a good human being. All the wealth, power, knowledge is worthless if one is not a good human being. May God bless you all for bright future.

Indian Pharmaceutical Industry

Slow poisoning is on. It will take time, but end is inevitable. Believe it or not, the world class Indian pharmaceutical sector is subjected to slow poisoning and is under attack by vested interests. The poison is being released into the system aimed at total destruction. It’s a novel way to attack. This sector is relatively small compared to FMCG sector. HUL profits for last year were higher than turnover of Lupin Laboratories. This is just to give an idea of the size of these two sectors. The question is if this sector is so small then why would it come under attack? There are many reasons. Across the world human beings are very sensitive to anything that is related to food and healthcare. India was dominated by MNCs in these sectors. This is now a history. In this sector the top companies in India are of Indian origin and these companies are a threat to the supremacy of MNCs across the world. As far as FMCGs are concerned, their Indian competitors are no threat these giants operating world over. They rule the Indian market. In addition the majority share holdings in these companies are with foreigners. Same is story for auto sector. The market leader Maruti Suzuki has over 56% foreign share holdings and most of the other players are unlisted companies in India making huge profit compared to their Indian counterparts. Electronics is totally dominated by foreign players, be it LG, Samsung, or Sony. Indian manufactures are struggling to survive. Why should these MNCs bother about their Indian competitors? Similar is the story for engineering sector, be it ABB or Siemens. Nestle and Cadbury’s are market leaders in different segments, not Amul. Indian children are growing on noodles, pizza and burgers. Foreign Banking and Insurance operations are growing and have sizable business in India compared to Indian operator’s share in the foreign countries. Indian banks or LIC have neglible presence in the world market, thus no complaints about Indian banks or insurance companies by foreign players. Oil and Gas, IT and Metal sectors also have some foreign players but dynamics of that business is different, and there is no attack on Indian companies. Therefore large foreign holdings in their Indian arm, strong market presence and big profits that are repatriated to country of origin makes India a wonderful destination to operate where their supremacy is not challenged. Why then anyone would bother about Indian manufacturers? The chart below gives a fair idea of foreign holdings of leading listed companies. There are thousands of privately held, unlisted companies who make fortune for the stakeholders that go unnoticed by a common man. Thus there is no cause of worry for MNCs. India is safe heaven for them. But it is not so for pharmaceutical sector, thus it is under attack.

Company	Foreign              Holding                31st March 2013	Last Declared Dividend
Pharma Sector
Sanofi	60.40%	290%
GSK Consumer Healthcare	72.46%	450%
GSK Pharma	50.67%	500%
Pfizer	70.75%	325%
Novartis	75.00%	200%
AstraZeneca	75.00%	175%
FMCG Sector
P & G	68.73%	225%
HUL	52.48%*	600%
Colgate	51.00%	900%
ITC	50.29%+	525%
Nestle	62.76%	125%
Engineering Sector
ABB	75.00%	150%
Siemens	74.71%	300%
SKF	53.58%	75%
Auto Sector
Maruti Suzuki	56.21%	160%
Bosch	71.18%	600%
Cummins	51.00%	400%
IT Sector/Metal Sector
Oracle	80.27%	100%
Sesa Goa	55.13%	10%
Oil & Gas Sector
Cairn	53.66%#	65%
Castrol	71.03%	75%
Source: Published information of/for listed companies *Buyback offer to shareholder to raise holdings to 75% is on (May 2013) +Includes Foreign companies, Foreign nationals and FII #Includes Foreign Promoters and FII There are many unlisted companies operating in India with foreign holdings

Pharmaceutical MNCs are attacking the Indian companies, its guerrilla warfare. Best form of defence is attack. MNCs for their stakes in India cannot go in for direct confrontation, so they have to take help of local gullible persons and institutions, other foreign agencies and even traitors to attack. The corruption in India makes it easy for those who can bribe in hard currency and offer foreign trips, to get what they desire. Attacking Indian pharmaceutical companies is a well thought of, systematic, long-term plan. Attack from foreign entities can be understood. What surprises is the attack by fellow Indians. Some of hospitals from Mumbai and from Delhi have reported to have banned medicines of Ranbaxy. One hospital has asked the company to prove their quality. This reminds me of wolf and lamb story of Panchatantra that mentions a ridiculous justification by wolf to eat the lamb. This is ridiculous; I call someone a cheat and ask that person to prove that he/she is not a cheat, rather than I furnishing the proof of cheating. So any one can charge anybody and the onus will be on the person charged to prove the innocence. The Ranbaxy problems with USFDA are of mid last decade for certain formulations. These hospitals have not used those formulations. If other medicines from Ranbaxy have been used then these hospitals should provide the data of casualties caused by Ranbaxy medicines for last eight years. How come these hospitals woke up so late and are now worried? Is their assessment of patient’s relief/recovery guided by media reports about Ranbaxy? Is it a part of evil design to malign the company image? Unfortunately Indian pharmaceutical manufacturers are turning a blind eye. If one manufacturer is attacked then the others look at it as an opportunity to grow at the cost of the sufferer. Such manufacturers lack foresight. A stage has come when they have to unite and expose the evil designs of multinationals. Showing a top Indian company in a bad taste is no trump card for growth of others. At opportune moment the MNCs will take the joker out of the pack and tell the world that if the top Indian manufacturer is so bad then imagine the condition of rest of the manufacturers. This is dangerous. Not only the top manufacturer would lose the business but it will have a snowballing effect where the entire Indian pharmaceutical industry would lose its credibility and that will take us back to 1960’s. We will be forced to be dependent on MNCs. That will be catastrophic.

What is the genesis of this situation? Lets us take a look at the past. Things changed for Indians in 1970’s when government announced DPCO (Drug Price Control Order). During the same period government brought in some restrictions for pharmaceutical MNCs operating in India. Process patent was in force but not the product patent. All this made the pharmaceutical MNCs uncomfortable and many of such companies either withdrew from Indian market or reduced their exposure. The government support helped the Indian manufacturers to gain strength and they got a chance to prove themselves. The country that was net importer turned in to a net exporter in few decades. World started depending on India for pharmaceutical raw material (API) and finished formulations. Indian manufacturers also went in for manufacturing pharmaceutical equipment and all this has been an eyesore for MNCs.  The MNCs that milked India till 70’s of last century were helpless. Different formulations, innovative fixed dose combinations and penetrating marketing strategies developed by Indian manufacturers left the MNCs high and dry. The hope for MNCs was India’s acceptance to IPR in 2005. There were lots of discussions across the industry to access the future of Indian pharmaceutical industry post 2005. There were different schools of thought. Some felt that India’s dependence on MNCs would increase while others thought the opposite. Post 2005 and even in the era of liberalization the MNCs could hardly do anything. Indian pharmaceutical manufacturers started eroding the bastions of MNCs. Many of them went in for M&A, started their own projects in different countries across the world, gained sizable market share and offered quality products at much lower cost. Many of the MNCs closed their API plants and sourced the raw material from India. And then there was a limit to the patience of MNCs. The overpricing of MNCs was getting exposed. There was advent of generic era that further exposed exploitation by MNCs. Many governments around the world modified their budgets on healthcare because of availability of generics. The profitability of MNCs from yesteryears money spinners plunged. It hurts when you lose the money, it hurts when you see someone overtaking you, it hurts more when you see an Indian company doing this. The MNC profits, their future in the generic jungle is under threat, their ego is hurt. These MNCs are averse to strategic alliances with Indian manufacturers. Their ego prevents them from understanding the reality and taking rational decisions. Such alliances can be a win-win situation, but the MNCs have to keep their aura of supremacy of yesteryears in a closet and then take a step forward. They can’t do it, so attack the Indian players.

Indians have pardoned the cola giants when their products were found to contain pesticides above the desirable limits. Indian parents whose children’s life was endangered due to insects in the chocolates or higher radiation levels in milk powder turned a blind eye towards the MNCs manufacturing such products of questionable quality in India. MNCs manage such situations well. Their PR activities pull them out of the mess that they create. Indian companies are unable to handle adverse propaganda. The pharmaceutical companies may or may not have faulted but there is a malicious attack to spread the venom. When there is a price war MNCs cannot show their superiority unless they play foul. Time has come to understand such evil designs of all those who hate to see India prosper, who dread to see Indian drugs curing the billions around the world at low cost and those who want prosper at the alleged failures of fellow manufacturers. It’s time to tell the world the progress of Indian pharmaceutical industry. Stand together for Indian pharmaceutical industry before it is too late. Solidarity is the only way out.

Nurturing Laziness

The political parties are bent upon providing food grains at subsidized price to those under BPL. In fact the limit of income of less than Rs.27/- can itself be challenged. But that is another story. The intriguing questions are, how one can ride a bike and get a BPL card for himself, or how a female may find some time in between her two favourite serials and rush to get the BPL card.

The media has reported that the government might call a special session of Parliament to pass the National Food Security Bill. The ruling UPA claims that it will solve the hunger crisis on the other hand its critics are certain that it will only increase corruption, and that the public distribution system must be wound up and replaced by cash transfers. The corruption in PDS will never get eliminated and on the other hand the cash transfers will open up new avenues for corrupt officials. Today’s print media has advertisements announcing the launch of similar scheme in Madhya Pradesh, making rice available for Rs.2/- per kg and wheat for Rs.1/- per kg. Making food available at such a low price is big threat to the nation. I am not talking economics but conditioning of mind. Out of the basic needs of Roti, Kapada and Makan, government has taken care of Roti by providing food at near zero prices. Governments in many states provide a piece of land and the cash assistance to build the house. The Makan is also taken care of. Kapada is not of great significance and the same is available, either as new or used one at reasonable price. Apart from this the RTE helps in education, various schemes for minorities offer lot of assistance, healthcare, mother and childcare are also taken care of. Incentives for going to government dispensaries for prenatal check up and delivery are already available. Everything provided by the government to its subjects in communist country is understandable. In communist nations a “common man” cannot influence the politburo and cannot change the government. Situation is different in democratic countries. Such schemes are more for creating a vote bank rather than the consideration for welfare state.  If the governments are of different political ideologies at center and at state level then there are chances of competition. One may offer greater benefits than other to appease and this will lead to rat race. There is no end to it. Now the question that bothers me is simple. If one gets everything from government, than why should people work? What is the motivation? Getting dole can be motivation for those above BPL to fall in to BPL. This is not done. Jobs need to be created and fair wages paid so that the citizens can buy the needs form their earnings. Dole, if I can call all these schemes so, makes one lazy. This is not acceptable. India with largest youth population should not be pushed to be lazy nation. If jobs are difficult to create, which can be debated, then entrepreneurship needs to be encouraged. Let people work and earn then spend rather that subsidizing, or giving free. That is bad for the economy and the nation.

Create real jobs. Not jobs on the paper. Fictitious job creation is still more dangerous. I know a sad story of a person who was in fish farming. The labour intensive activity went on for years till one day he found workers abandoning the job on his project. In few months he had no worker to work and was forced out of the business. His enquiries revealed that his ex-employees are on pay roll of some scheme, that provides wages and sad part was the workers may not work if they share the wages with certain individuals and make money even without stepping out of their home. If these kinds of jobs are made available then who the hell will go in for a hard labour on a fish farm? Are we not making the productive population lazy? Work has no substitute. A Latin proverb says, “If there is no wind, row”. Wind will induce lethargy, nobody will row. If one has to reach somewhere, one has to row. Let there be no wind of cheap food, free housing and lots freebies, nobody will row, this will induce lethargy and nation will depend upon the few who work. To ruin the nation nurturing idleness is enough, you don’t need enemies.

The need is for good governance, transparency and no subsidies. The need is to make the population work and not depend upon government dole. If India has to prosper then the politicians have to realize this ground reality. They should strive for the growth and not for just coming to the power.