The country's highly disorganised drug retail, whose annual turnover of Rs 45,000 crore (Rs 450 billion) is shared by some 550,000 traders, is poised for a metamorphosis with some of the biggest names, including from overseas, having spotted it as a big opportunity.
The first off the block appears to be the Reliance Anil Dhirubhai Ambani Group (R-ADAG), which is investing Rs 1,200 crore (Rs 12 billion) in setting up a large drug distribution backbone.
As has happened frequently, R-ADAG may soon be joined by brother Mukesh's Reliance Industries. The spokesperson for Reliance Industries said its retail arm, Reliance Retail, was exploring the option of sourcing directly from manufacturers to weed out spurious drugs from its proposed pharmacies.
The brothers are likely to have company in two multinationals: Zuellig Pharma, the $6 billion Hong Kong-based pharmaceutical and healthcare distribution and logistics specialist, and US-based Cardinal Health, which is behind the drug retail chain Medicine Shoppe.
Trade sources also mention plans being hatched by the Aditya Vikram Birla Group, retail chain Subhiksha and a leading unnamed pharmaceutical company.
At present, the only semblance of organisation in drug retail is the umbrella of the All India Organisation of Chemists and Druggists (AIOCD). Its structure involves tiers of stockists, wholesalers and retailers. Drugs are sold in accordance with the agreements specifying the margins between the associations of traders and manufacturers.
With the new entrants comes the inevitable churn of talent. Rajendra P Gupta, who had been heading R-ADAG's Reliance Health Venture, has quit and will soon join a similar venture of a top Indian corporate house. The R-ADAG venture is scheduled to take off in May.
Gupta said: "I have moved out of Reliance ADAG and am on vacation. I will finalise the options shortly. Healthcare including pharma retail and distribution will remain my key focus area."
The R-ADAG spokesperson confirmed the exit, but said: "The exit of an individual will not affect the business plans of an organisation like R-ADAG. We are going ahead with our project."
Zuellig is the largest drug logistics provider in Asia with extensive operations and warehousing facilities in a dozen countries. "India is a major market with vast potential," said Nike Ampton, managing director of Zuellig Pharma India, the Indian subsidiary that Zuellig has already set up. It has tied up with the Chennai-based logistics provider Sical for warehouse management and trucking services.
A team of Cardinal Health's senior executives visited Mumbai two months ago to assess the Indian market and held rounds of discussions with Indian companies for a partnership.
