What is profit margin of Pharmaceutical Retailer (Chemist and pharmacies)?

Pharmaceutical distributors include chemists, pharmacy store, medical store, drug store etc. Pharmaceutical distributors are the retail drug stores having retail drug license and deals in dispensing of medicines against prescription of a registered medical practitioner. They are in directly contact with patient or its caretaker. That makes them eligible for gaining maximum profit margin in pharmaceutical distribution channel.

Chemists and Pharmacies are the bottom part of pharmaceutical distribution channel. Whether a pharmaceutical company sell through branded drug marketing, generic drug marketing, pharma franchise marketing or OTC drugs marketing, pharmaceutical retailers is important part of their distribution channel.

Every part of distribution channel gets a certain amount of profit margin as we have discussed in our article: Profit margin in pharmaceutical industry. Pharmaceutical retailers are having a certain amount of profit margin which vary little bit as marketing types of a pharmaceutical company

Read: Difference between branded medicine and generic medicines

Profit Margin of Pharmaceutical Retailers (as per Marketing Types):

In Branded medicine marketing:
  • Profit margin is 18-22% plus offers
A pharmaceutical retailer gets medicine from pharmaceutical wholesale at 18-22% less than maximum retail price menus GST which is known as price to retailer (PTR). Price to retailer is calculated from price which is remaining after deducting GST from maximum retail price. An invoice issues to pharmaceutical retailer will have PTR plus GST if pharmaceutical distributor has goods and service tax identification number.

In Generic medicine marketing:
  • Profit margin is more than 30%
In generic medicine marketing, market is based at rate. There is no PTS/PTR, only game is to provide maximum margin so pharmaceutical retail push their medicine to patient and get maximum profit margin. Profit margin of distributors and retailers is not calculated by pharmaceutical company but depend at market conditions. Companies distribute generics by adding their margins at manufacturing cost and there after companies don’t have much control over distribution channel’s profit margin.

In Over the Counter Medicine marketing:
  • Profit margin is 18-22% plus offers
OTC drugs follow almost same profit margin as of branded drugs marketing. Only difference is that OTC drugs could be sold out without prescription of medical practitioner, so consumer has to ask by brand from retailers otherwise its chemist or medical store will to provide product of his choice. If a OTC product is not sold through asking by brand name by consumer then it will be sold like generic drugs and profit margin will be applicable of generic drugs marketing.

In Pharma Franchise Medicine Marketing:
  • Profit margin is 18-22% plus offers
In pharma franchise, pharmaceutical distributors or wholesaler is replaced or substitutes by Pharma Franchise Distributors. Profit margin of pharmaceutical retailers are almost same as of branded medicine marketing as franchise medicines are also promoted as branded medicines by their franchise distributors.




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