Ammas Cure a Bitter Pill for Pharmacies

 

With 100 Amma Medicals expected to come up,pharmacy owners say their margins will be hit

VIDHYA SIVARAMAKRISHNAN & SANGEETHA KANDAVEL CHENNAI

Chennai, March 19,2014 – Tamil Nadu Chief Minister J Jayalalithaa may have promised to take her partys freebie culture to the rest of the country,but at least one group is not impressed with her latest proposal to subsidise medicines.
Pharmacy owners in the state are worried that if Jayalalithaas move to set up medicine shops selling drugs at a discount comes into effect then it would hurt their margins that are already being squeezed under a new pricing mechanism.

It (the subsidies) will gradually affect the growth of the industry (pharmacy) and some people will see de-growth also, said B Venkat Raju,joint secretary of All India Organisation of Chemists & Druggists (AIOCD),a trade organisation that represents nearly 7.5 lakh pharmacies and chemists in the country.

We are still struggling to stay afloat because of margin erosion which has happened due to the new Drug Price Control Order (DPCO), said Raju,who is also the AIOCDs convener for the south zone.

Last May,the government brought in a new DPCO that brought in price ceilings for 151 of the 348 essential medicines,forcing prices to come down by as much as 60%.

The states Finance Minister O Panneerselvam had announced that the state government would soon set up 100 Amma Marunthagam (Amma medicals) during his budget speech for 2014-15.They are expected to be launched after the upcoming general election.If it is just a few (government pharma retail outlets) or so,it may hurt some (of the private ones) but as long as the government doesnt plan to scale it up from a few to many,it is fine, said Sujay Shetty,India leader in the pharmaceuticals and life sciences segment at PricewaterhouseCoopers.Both the DMK and the AIADMK governments that ruled over the past decade have been showering the state with freebies in the hope that they will bring them back to power.

After winning the 2011 assembly elections,Jayalalithaas government has been implementing various handout schemes such as free milch cows,gold coins and laptops.Her government has also opened Amma Canteens and Amma fruit stores,where food and fruits are sold at discounted rates,respectively.The Amma medical shops are a step further in that direction.Activists welcomed the move to set up the subsidised pharmacies.

I am glad some competition has been introduced in the market, said Leena Menghaney,a lawyer and activist.This is a reform that is needed to be done in a long time.

However,rival DMK said there was nothing new in the initiative.The DMK government had tried something similar in the 1970s and 80s,where subsidised medicines were sold at cooperative stores.

There was a small counter at the supermarkets which sold medicines, said DMK spokesperson TKS Elangovan.The initiative lost steam and failed.PwCs Shetty pointed out that a similar initiative Jan Aushadhi had been introduced by the Centre and is ensuring availability of quality medicines at affordable prices to all. It is a very good initiative for the bottom-of-the-pyramid population.Yes,the government can make a mess when it gets into business,but the Jan Aushadhi story has drawn a good response, he said.  The Economic Times

(With inputs from Raji Reddy Kesireddy in Hyderabad)