Drug distribution in India is layered and
regulated. Unlike in the West, where a manufacturer can directly supply goods at the
retail level, products in India move through a chain of intermediaries.
The manufacturer supplies goods to the
first layer comprising a clearing and forwarding agent, a super stockist or a
company-owned depot. These, in turn, supply to stockist from whose premises goods are
routed to wholesalers, medical institutions, hospitals and retailers. The retailer
dispenses the drugs to final consumers. Manufacturers can directly supply to institutions
and hospitals, but never to a retailer.
of drug distribution
There are seven strategically
located medical stores organisations, which supply to government hospitals and
dispensaries in rural and suburban areas. These organisations procure goods directly from
companies by inviting tenders so as to keep the costs low. Government hospitals and
institutions also invite tenders. Some private institutions also go in for tenders while
the majority negotiates with companies to discount stockist and chemist margins in
addition to bulk purchase discounts.