At least once a month, Bhavik Kumar, founder and CEO of Medibox, gets a panicked call. The callers are worried Indian medicine distributors, desperate to either shut down or get acquired. As the head of Medibox, a digital platform for e-marketing, e-procurement and e-distribution of medicines and healthcare products, Kumar is in a unique position. While, on the one hand, his platform helps connect distributors to pharmacies, the network he has created means that Kumar is able to help connect these beleaguered distributors to potential buyers. One way or the other, Kumar does what he can.

Ever since the inception of the Goods and Services Tax (GST) on 1 July 2017, the calls have only increased in frequency. You see, GST has been something of a death blow to India’s circuitous pharma distribution set-up. Already, around two-thirds of small pharma distributors have shut shop.

The pharmaceutical supply chain in India is chaotic at best. Consider this: A handful of players control the entire chain in the US. In India? It takes 80,000 distributors along with over 8,00,000 retailers. The relay starts at the drug manufacturer with Carrying and Forwarding Agents (C&Fs) who operate within a state and under its tax regime. They ensure the drugs reach the thousands of distributors for a service charge from pharma companies, who have corporate offices in metros. From here, without any organised or expected pattern, distributors supply semi-wholesalers who, in turn, sell to pharmacies spread across the country.

It’s a complicated process, and it comes with significant drawbacks. Medicines being inaccessible in certain geographies or expiring. Problems costly to both life and business. “Why is Lux soap available everywhere in the country but paracetamol or life-saving drugs are not? Why do Rs 3,000 crore ($414.4 million) of medicines expire each year in warehouses?” Kumar indicates that the circuitous, unorganised system is to blame.

Enter, GST.

GST, a ‘one nation-one tax’ system, has drastically altered the Indian pharmaceutical distribution landscape. With the removal of state-level taxes, the valuation of traditional drug distribution businesses has been slashed by a third on account of competition from distributors in other states as well as far-flung warehouses now being in less demand.

This would never have been possible before GST, with state-level taxes ensuring that local distributors would always have a significant pricing advantage. By breaking down tax borders, GST also did away with the need for many middlemen. In addition, it effectively legitimised online pharmacies, thereby simplifying the supply chain.

The growing demand for services like Medibox is an example of this. Sure, the 700-odd distributors using Medibox’s e-distribution platform are a small drop in the ocean of India’s 80,000 drug distributors. But they represent the start of a change.

AUTHOR

Ruhi Kandhari

Ruhi writes on the impact of healthcare policies, trends in the healthcare sector and developments on the implementation of Electronic Health Records in India. She has an M. Sc. in Development Studies from the London School of Economics.

View Full Profile

Available exclusively to subscribers of The Ken India

This story is a part of The Ken India edition. Subscribe. Questions?

MOST POPULAR

Annual Subscription

12-month access to 200+ stories, archive of 800+ stories from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 2,750

Subscribe
 

Quarterly Subscription

3-month access to 60+ new stories with 3-months worth of archives from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 1,750

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

Rs. 500

Subscribe
MOST POPULAR

Annual Subscription

12-month access to 150+ stories from Southeast Asia.

$ 120

Subscribe
 

Quarterly Subscription

3-month access to 35+ stories from Southeast Asia.

$ 50

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

$ 20

Subscribe

Questions?

What is The Ken?

The Ken is a subscription-only business journalism website and app that provides coverage across two editions - India and Southeast Asia.

What kind of stories do you write?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics.

We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

What do I get if I subscribe?

For subscribers of the India edition, we publish a new story every weekday, a premium daily newsletter, Beyond The First Order and a weekly newsletter - The Nutgraf.

For subscribers of the Southeast Asia edition, we publish a new story three days a week and a weekly newsletter, Strait Up.

The annual subscription will get you complete, exclusive access to our archive of previously published stories for your edition, along with access to our subscriber-only mobile apps, our premium comment sections, our newsletter archives and several other gifts and benefits.

Do I need to pay separately for your premium newsletters?

Nope. Paid, premium subscribers of The Ken get our newsletters delivered for free.

Does a subscription to the India edition grant me access to Southeast Asia stories? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

Do you offer an all-access joint subscription for both editions?

Not yet. If you’d like to access both editions, you’ll have to purchase two subscriptions separately - one for India and the other for Southeast Asia.

Do you offer any discounts?

No. We have a zero discounts policy.

Is there a free trial I can opt for?

We don’t offer any trials, but you can sign up for a free account which will give you access to the weekly free story, our archive of free stories and summaries of the paid stories. You can stay on the free account as long as you’d like.

Do you offer refunds?

We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Please write to us at [email protected] detailing the error or queries.