 How did FMCG industry crack theirtier 2+ distribution

o distributors’ gripe with the FMCG giants is that they are tilting the scales in the
favour of the new-age companies as they generally buy from the FMCG firms in bulk
and pay them at once unlike the traditional distributors.
o Traditional distributors are miffed over the fact that while they manage to land a
3.5-5 per cent margin from the FMCG firms, the new companies are able to snag 15-
18 per cent

CIPLA

 Challenges faced by pharma companies in general??

o Big pharma companies face a huge drop in revenue from blockbuster drugs coming
off patent
o A lack of a stable pricing and policy environment-The challenge created by
unexpected and frequent domestic pricing policy changes in India.
o Best-in-class pharma companies globally have an inventory period of 64 days as
compared to Indian counterparts that have 98 days
o ogistics and warehousing costs in India is 15 per cent higher compared to other
countries
o This rapid growth has yet to translate into a modernization of the Indian distribution
system. The main hurdles include the highly fragmented nature of the distribution
network, limited advancement in regulatory reforms, and the presence of strong
resistance from lobbies of traders involved in the supply chain of pharmaceutical
products.
o greater risks for biotech products, which require careful climate control throughout
its transit period.
o infrastructure for cold-chain management is still developing in India
o In India, most brands have generic versions of drugs and retailers can usually obtain
higher margins with generics than for branded products. To reduce risks of
substitution, innovator companies must make sure their products are made
available to the stockists and retail shops
o Lack of storage facilities
o Lack of adequately qualified doctors
o Reliance on local chemists
o No awareness regarding the treatments
 Why are they heavily dependent on distributors/retailers?
o distributor provides patients with timely and convenient access to safe prescription
pharmaceuticals by purchasing from a multitude of manufacturers, ensuring the
products are warehoused and transported appropriately to myriad dispensing
points, and maintaining compliance with federal and state regulations.
o Pooled warehouses
 How can they reduce their dependency/wastage?
o Long-Channel Inventory Management
o Optimise the supply and the no. of stockists, so that retailers get little chance to ask
for discounts.
o Promote tele medicine
o Dedicated transportation and cooling systems
o Dedicated rural task force with local guides and generate local employement
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 Supply chain suggestions?
 Any suggestions on any market models ?
o Select women as the lead
 Train them the basics
 Provide minimum salaries

 Suggestions on how to bring the lesser margin brands to more margin brands??
 How to enter rural areas?
 Did any company do it in the past? Here or elsewhere??
 Role of technology in all of this process?
o  Artificial intelligence (AI) can be a powerful tool in the pharmaceutical
industry’s research and development. So with the help of modern technologies,
pharmaceutical companies should aim for quality but cheap products
o end-to-end supply chain visibility through digitalization and use of global standards
which facilitate interoperability.
o Cred’s model to make IT filing more transparent
o Introducing a medical database.. for easy reference and easy buying for long term
stock – D2C model
 Provide helplines for doubt clarification
o
 Most effective model??
 Learning or opportunity that CIPLA can leverage?
 How can pharma companies improve their profits??
o