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Wealthy people make up 67% of customers at pharmacy chains.
Wealthy people make up 67% of customers at pharmacy chains.

Shopping at pharmacy chains saves money

  • Chain pharmacies sell medicines at cheaper prices than independent shops, but only richer customers take advantage of this, says study

Independent pharmacies have long dominated retail medicine sales in India, but chains such as Apollo and MedPlus are picking up. A recent study finds that medicines are cheaper at pharmacy chains, but they do not reach poorer people as mostly wealthier customers tend to go to such outlets.

Rosalind Miller and Catherine Goodman of the London School of Hygiene and Tropical Medicine surveyed around 300 chain and independent pharmacies in Bengaluru in 2014-15. Field workers went undercover as customers and reported symptoms for either tuberculosis in adults or diarrhoea in kids. Over 800 real customers were also asked about their assets to find their economic status.

In the case of diarrhoea medication, chain and independent pharmacies both charged under maximum retail price (MRP), but chain outlets charged on average a rupee less than independent ones. For tuberculosis medication, chain pharmacies charged in line with MRP, while independent ones charged 1.40 over the MRP.

Total spending was not much different for tuberculosis, but for diarrhoea cases, spending was 8 more on average at independent pharmacies because they sold more costly antibiotics.

Pharmacy chains can sell at lower prices as they buy in bulk and so get discounts. Also, buying directly from manufacturers means fewer mark-ups along the supply chain. These savings then pass on to customers. Also, staff at chains receive fixed salaries that do not depend on how much they sell. So they are less likely to push costlier medication.

Wealthy people make up 67% of customers at pharmacy chains. The authors suggest chain pharmacies can help make medicine affordable for poorer Indians. Policymakers can facilitate this by encouraging expansion of pharmacy chains to lower-income areas with tax breaks and relaxed licensing.

Also read: “Cheaper Medicines for the Better Off? A Comparison of Medicine Prices and Client Socioeconomic Status Between Chain and Independent Retail Pharmacies in Urban India"

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