Mumbai: Indian drug retail chains are now looking to the private label business, which will allow them to sell generic versions of over-the-counter as well as prescription drugs under their own brand.
Two leading drug retailers, Gurgaon-based Guardian Lifecare Pvt. Ltd and Hyderabad-based MedPlus Health Services Pvt. Ltd, have launched private-label products by tying up with manufacturers.
Delhi-based Religare Wellness Ltd’s private-label products are expected to hit the shelves by the second quarter of calendar 2009.
Step forward: Private-label selling is controversial as it allows pharmacy chains to substitute branded prescription drugs by retail stores. Rajeev Dabral / Mint
While Guardian has not yet started retailing prescription drugs under its brand, it has a range of nutritional products on offer in its stores nationwide. MedPlus sells generics of prescription drugs in its outlets.
The move marks a step forward for Indian drug retailers chasing growth. The private-label business is an established drug retail practice in markets such as the US and Europe.
Religare Wellness’ chief executive Sanjiv K. Choudhri said his company “views private labels as a significant opportunity in the health retail business. As the number of stores increases and as the market becomes more matured, private-label products will continue to become more important”.
While the private-label business allows pharmacy chains to sell generic drugs under their own brand, it has been controversial in that it also allows for substitution of branded prescription drugs by retail stores.
The Rs55,000 crore Indian drug market is predominantly a branded-generic space where drug firms sell generic or off-patent drugs under brand names such as Crocin, Brufen, Mox and Calpol.
The concept of generic-generics, or generic drugs sold under drug names such as paracetamol, ibuprofen and amoxicillin, is not as prominent though many small drug makers sell their products this way.
By launching private-label sales, drug retailers stand to benefit by avoiding middlemen in the supply chain and are also not bound to follow the margins between wholesale and retail prices fixed by the drug industry.
“Under the private-label business, the retailers can offer generic drugs at prices that are at least 20% lower than the branded ones,” said Ashutosh Garg, chairman and managing director of Guardian Life.