At least two large pharmacy chains are up for sale, industry sources said. Some others have shaken up their top management, while a few have cut back on their expansions. One is trying to rediscover its business model by looking at rural markets. And all are woefully short of achieving the targets they had set.

"Organised retail in health is new to India and naturally requires some trial and error to know which all products sell well in a particular store or area," said Sanjiv Chowdhary, CEO of Fortis Healthworld, the pharmacy chain promoted by the Singh family of Ranbaxy [Get Quote]. The company recently got a brand new team at the top led by Chowdhary.

These chains put a large part of the blame on soaring real estate prices. Medicine Shoppe, the Indian arm of global chain Medicine Shoppe International, has almost shelved its plans of setting up 500 medical stores and now intends to offer "value-added services" and set up community medical stores in rural areas, where real estate prices are still reasonable.

"It is not viable to start a pharmacy by paying Rs 35-50 per sq ft rent in places like Mumbai or Delhi," said a Medicine Shoppe executive.

The other factor is the lack of qualified pharmacists to run their shops. Under law, pharmacists alone can sell drugs. And, in the last two years, their salaries have shot up by over 200 per cent.

Meanwhile, standalone pharmacies are readying themselves to take on the large chains.

Though their plans of floating companies in about 16 states to supply drugs to their members have not taken off as expected, they are now planning regional clusters for procurement of drugs and to offer value-added services.