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How e-pharmacies would able to give 18-20% discount to customers?

Query: First of all, a big thanks for your work. Pharmaceutical industry looks like complex web for a common people but due to your blog it is easy for us to understand this whole industry. Now coming to my question, I want to know if total margin for retailers in this industry is 18-20% then how netmeds, pharmeasy and other online players are giving 25% discount? And what steps we have to take if we want to open pharmacy shop and want to give 15-20% discount. Can a retailer buy medicines directly from company or c&f and cutting margin of distributor/Wholesaler? Response: Online players give discounts upto 18-20% or something like that. Not at all products they give exact margins. In the pharmaceutical industry , Only few brands give less margin, most brands give good margin plus schemes etc, even to offline retailers. If we talk about generic and other products there are huge discounts like product cost is 30 rs and mrp is 100 rs. So, an 25% discount in the pharma market is not

Pharmaceutical Marketing Company Vs Pharmaceutical Manufacturing Company

First have a look about brief information about pharmaceutical marketing company and pharmaceutical manufacturing company. Pharma marketing company is the way to start marketing and promotion of pharmaceutical products by own name through getting manufactured product at third party manufacturing basis or contract manufacturing basis. Whereas Pharma manufacturing company is way to set-up manufacturing unit and manufacturing pharmaceutical products for own marketing or for other pharmaceutical marketing companies. 


Pharmaceutical Marketing Company Vs Pharmaceutical Manufacturing Company: Which one is better to start?

In our one article, we have discussed about which option will be better for you to start pharma marketing business i.e. pharma franchise marketing vs pharma marketing company. In this article, we are going to discuss about which one will better to start between pharmaceutical marketing company and pharmaceutical manufacturing company.



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Which one will be better?

Both are the ways to become owner of a pharmaceutical company and both are profitable ones. Both have own limitations and advantages. It’s not easy to select from these two but there are limitation of any one personnel ability, skill and experience.

Finance is one of the critical selection points as pharmaceutical manufacturing company requires a huge amount of investment as compare to pharmaceutical marketing company which requires comparatively less amount to start. Finance is not a single criteria but we can’t ignore financial aspect while selecting from manufacturing business verses marketing business as most of pharma business start-up faces financial problems.

Pharmaceutical Industry is regulated business and every country has own regulatory body to regulate manufacturing, marketing, distribution, prescribing and dispensing of pharmaceutical products. To meet regulations, we have to build a plant as per prescribed norms e.g. Schedule M norms, WHO:GMP norms, USFDA Norms etc. From building structure to interior, from machinery to working staff, from raw material to finished pharmaceutical products, everything should be as per prescribe standard to meet the guidelines. These makes manufacturing plant a costlier one.

Other selection criteria includes experience (whether having manufacturing sector experience or marketing/sales experience), business model (contract manufacturer, exporter, institutional sale, prescription based marketing etc), complication to start (requirements and documentation) and resources available (other than finance like premises, building, qualified man power availability etc)

Pharmaceutical industry is vast. There are lot of departments within industry to make it handle a pharmaceutical company e.g. manufacturing section, analytical section, regulatory affair department, marketing, sales, administration etc. Every business start-up requires a special type of specialization along with common business basic fundamentals knowledge to set-up business.

Marketing and sales professionals wouldn’t have manufacturing knowledge and will face lot of difficulties to set-up manufacturing unit until/unless they partnered or employed experienced professionals having experience or knowledge in these departments or vice-versa. This is applicable to all department professionals.

Business model also affect the decision while selecting manufacturing business or marketing business. If you have contract manufacturing clients, then marketing company won’t help you to set-up your business. You need to set-up own phama manufacturing unit to meet the demand of your proposed customers. In case of export, manufacturing unit having required certifications as per exporting country is good option to start with. But if you want to set-up business based upon prescription based marketing, then marketing company or manufacturing company both could be option but marketing company set-up will be less costly and easy to start option.

Pharmaceutical manufacturing unit set-up is more complicated as compare to pharma marketing company. Manufacturing unit set-up requires premises situated at industrial zone, section wise area requirement, fully closed plant having double door system, HVAC unit, technical staff, gmp specified machinery and laboratory equipments etc. for applying for drug manufacturing license. Whereas pharmaceutical marketing company set-up requires minimum of 10 meter square covered premises, one competent person and few other easy to fulfil requirements to take wholesale drug license for drug distribution.

If you have a good amount of fund (Investment or owned) and resources, and having clear vision for future expansion, business plan, strategy, market, experience then pharmaceutical manufacturing unit is good way to build your presence into pharmaceutical Industry. But if you have only having sales and marketing experience, limited area coverage, limited fund and want to set-up pharmaceutical company with limited resources the you should start with pharmaceutical marketing company. In future when you have built good set-up then you can proceed for pharmaceutical manufacturing unit.

Limitations and Advantages:

Pharma manufacturing unit and marketing company, both also have own limitations and advantages.
  • Manufacturing unit requires high resources to start but it give control at product quality/packaging, batch size, better rates etc where as marketing company requires less resources but don’t have over product’s quality or appearance as dependency at pharmaceutical manufacturers, batch size as per manufacturers minimum order quantity (moq) for contract manufacturing or third party manufacturing and can’t compete with rates provided by manufacturer as pharmaceutical marketer has received goods after addition of manufacturer’s profit.
  • Marketing and promotional expenses depend at business model you prefer to sell but pharmaceutical manufacturers have more business options as compare to marketers. Same type of business model requires same requirements for both manufacturer and marketer but additional ways of businesses for manufacturer create competitive advantages for them.
  • Capital investment (running cost) for manufacturing unit is very much high as compare to marketing set-up. If you aren’t in position to generate enough business for your organisation for some time, running manufacturing business could lead to big trouble. Marketing companies have advantage here as they have very less expenses which give them good time span to establish into market as compare to manufacturing companies.
  • Expansion of business is high in manufacturing sector as more business options and control over production capacity available. Sudden unexpected received big orders fulfilment ratio is high into manufacturing company whereas marketing company has to follow steps and request manufacturing companies for early dispatch of goods for fulfilment after unexpected big order finalization.
  • Healthcare professionals also give preference to manufacturing unit while come to business possibilities as compare to marketing companies
  • Manufacturing units has dosage form manufacturing limitation and limited to available sections like Tablet/Capsule Section, Liquid/Syrup Section, Parenteral (Liquid/Dry Injection) Section, Ophthalmic/Eye/Ear/Nasal Drop Section, Powder (Protein powder, Medicated powder etc) Section, Inhaler/Spray Section, Suppositories Section etc which section is available at manufacturing company, they can manufacture dosage form depend at this. Whereas a marketing company has open options for manufacturing own products at different manufacturers having different dosage form facilities and can launch products irrespective of dosage form.
  • May be marketing companies lack behind from manufacturing companies in many aspects but marketing companies setting up a less risky and easily manageable one.

Business Models for Pharmaceutical Marketing Companies:

Business Models for Pharmaceutical Manufacturing Companies:

Conclusion: 
As we discussed about both way of pharmaceutical companies i.e. pharmaceutical manufacturing company and pharmaceutical marketing company. We can’t just give preference to any one, you have to analyse all aspect of business to go with any one or both. But Marketing company is our favourite one as it can be easily started out with low investment and less time by a sales professional, doctor, distributor, non professionals with experienced team etc. At small scale marketing company is good but if you want to grow and expand your business at large extent then you will need a manufacturing unit whether you have own pharma marketing company or not.


Keywords: Indian pharmaceutical industry overview, growth of pharmaceutical industry, future in pharma industry, Companies marketing medicines, Pharmaceutical Marketing Company Vs Pharmaceutical Manufacturing Company,

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