Endless growth prospects for generics in India, Jan Aushadhi pharmacies aim to match growing demand: PMBI CEO Ravi Dadhich

The Pharmaceuticals and Medical Devices Bureau of India (PMBI), an implementing agency for the Pradhan Mantri Bharatiya Janaushadhi Pariyojana (PMBJP), clocked its highest monthly sales turnover of Rs 100 crore in May 2022.

The government-run Jan Aushadhi Kendras, pharmacies aligned with the scheme, have seen an exponential rise from less than 100 shops in 2015 to over 8,700 in 2022. The government has set a target to increase the number to 10,000 by March 2024.

PMBI is solely responsible for supplying drugs to Jan Aushadhi pharmacies through government-affiliated warehouses and suppliers; the pharmacists running the stores cannot source drugs from anywhere else. 

At present, more than 1,600 medicines and 250 surgical devices, including nutraceuticals, Ayush products and Suvidha sanitary pads that are sold at Rs 1 a pad, are available at these stores.

However, there is a steep gap in profit margins between Jan Aushadhi Kendras and private pharmacies.  

In an interaction with Moneycontrol, Ravi Dadhich, CEO, PMBI, underlines the steps the government is taking to expedite the sales of generic medicine in India. Edited excerpts:

There has been an over hundredfold rise in Jan-Aushadhi Kendras but profits and supply chain are very important for the viability of these pharmacies. How are you managing on these two fronts? 

The profitability of a single Jan Aushadhi Kendra is one aspect and that of the entire Jan Aushadhi system is another aspect. The cost of marketing and the multilayer supply system of branded medicine makes it expensive. When we procure medicine in bulk, we get very competitive rates because the cost of manufacturing these drugs is very low. 

We don’t do marketing for generic drugs as Prime Minister Narendra Modi is our brand ambassador, and we have a very small supply chain. We procure the medicines on our own; this is facilitated by our logistics partner which helps us in reaching the distributors or kendras. 

There aren’t many levels of supply involved, which have a margin or commission, so we save money there. 

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Since we procure at a very large scale, we get better rates. And we are selling almost at the procurement rate plus the administrative expenses, we are not into making profits. 

The quality of drugs being procured in government settings is often questioned. How do you do quality checks? 

We choose the suppliers or manufacturers through transparent norms. They must comply with the good manufacturing practices laid out by the World Health Organisation (WHO-GMP). Every medicine batch has a certificate of analysis attached, which is given by NABL (National Accreditation Board for Testing and Calibration Laboratories)-accredited labs and then we also do a second-level check of those certificates, via the 16 labs across India. When we get the go ahead from labs, we dispatch the medicines to the kendras. 

We do get complaints over the quality of drugs but that is mostly related to temperature and storage issues due to geographical conditions.

Given the rise in the number of new stores, how do you plan to proportionally increase the supply of drugs? 

We have an infinite scope of growth in India. We are only 1 percent of the total chemist shops in India, and sales value in absolute terms is also around 1 percent of total medicine sales in India, which is over Rs 1.5 lakh crore. As we expand the network, demand will rise, and we will match that with an increase in our supply of drugs. 

The closure of shops offering generic medicines is one of the biggest problems. What actions have you taken against them? How many have shut? 

We monitor our kendras. We know how much procurement a shop has done because it gets updated in our internal system since we have a single source of supply. We have daily stock availability of each shop. If a shop is closed for a prolonged period, we do send them show-cause notices also. 

In the last fiscal year, over 200 shops were given notices for non-compliance and were closed. These shops were non-functional and hence they were closed. We have given over 500 notices to different shops across India for not complying with the norms. 

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How many states are in touch with you for opening Jan Aushadhi Kendras?  

Since health is a concurrent subject, everyone has a different policy. 

We have our kendras in every state but the numbers vary from one state to another. Recently, the Bihar government entered into an agreement with us for opening 200 Jan Aushadhi Kendras and now the state has to take the process forward. The Union territory of Jammu and Kashmir recently opened 108 kendras and it was inaugurated by Prime Minister Modi. 

Are you noticing a difference in the behavioural pattern of doctors in terms of encouraging the use of generic medicines?

This is a subject on which the Union health ministry has to take a call, we can’t comment on that. But we did see recently that the National Medical Commission, in its draft regulation, has said that doctors should prescribe medicines with generic names only. I recently saw a doctor in PGI Chandigarh (Postgraduate Institute of Medical Education and Research) writing a Jan Aushadhi medicine for a poor patient.