Express Pharma

How Jan Aushadhi will change the game for pharma

Dr Vikram Munshi, Founder and Principal Consultant, Whitespace Consulting and Capability Building, evaluates the state of Jan  Aushadhi Yojana, and suggests changes which can boost its success

The taxi ride seemed to go on and on as I travelled beyond the city limits. I was going to a Jan Aushadhi centre in Gurugram for the purpose of completing some research. I had found its address online. We entered a part of Gurugram which seems to have been untouched by the urbanisation of the past two decades. The cab stopped in front of a modest home in a pastoral locality. I stepped down from my ride and looked around, trying to find the centre. Finally, a helpful grocery store owner pointed me to a shop which had its shutter rolled down. The signage of the shop confirmed that it was indeed a Jan Aushadhi centre. Perplexed at seeing the shop shut, I rang the doorbell next to the shutter. A senior gentleman came out of the house and after I explained that I was a customer, he opened the shop. I stepped inside a Jan Aushadhi centre for the first time in my life.

The shelves were half full (or half empty, depending on one’s perspective). To a person, who has visited tens of thousands of chemist shops as a part of the branded pharmaceutical industry, the shop seemed woefully understocked. The shelves looked ‘colourless’ thanks to the ubiquitous white coloured packaging of the medicines. The proprietor was courtesy personified as he took out the medicines I asked for. On probing, he confided that he was planning to shut the shop after two years of operation due to negligible sales despite being in a bustling locality where he was known in the neighbourhood.  He mentioned that the neighbourhood, despite its modest outward appearance, had residents who were ‘crorepatis’ after having sold parcels of their land. And they were not interested in buying ‘cheap medicines’.

On probing further on his daily sales, he confided that the daily sales were less than Rs 1000 per day (translating to a gross profit margin of Rs 100 per day). He was not even able to cover the cost of the shop and was planning to shut it down. Now, this is may not be the story of every Jan Aushadhi Centre. Speaking to some industry experts, they confirmed that the Jan Aushadhi centres outside government hospital centres are doing relatively better than the ones away from those hospitals.

Jan Aushadhi centres and cost effectiveness

At these centres, medicines ranging from antibiotics, vitamin supplements, cholesterol management, among others can be purchased at 1/3rd the price charged at a regular chemist shop. For example, a strip of 10 tablets of branded Rosuvastatin is available at a regular chemist for Rs 260 (net of the discount) but at the Jan Aushadhi centre, 100 tablets can be purchased for just Rs 230. Thus, for me, even the cost of the taxi ride was worth the effort. So are the medicines affordable? Definitely yes.

But what about quality?
Quality is an essential requirement while purchasing medicines from a new company. Take Rosuvastatin as an example. Following are some important questions that need to be pondered upon:

  • Is it possible to make and sell Rosuvastatin of reasonable quality at 1/10th the price of the quality players?
  • If it is not at the same quality of the branded generic medicines, will it still be at an ‘acceptable’ quality?
  • How does one define ‘acceptable’ quality? Is it as per the Indian pharmacopoeial standards?
  • Has the quality been checked and verified by the government?

If the answers to all those questions are a yes, then the Indian pharma industry is in for a challenge.
Meanwhile there are challenges facing Jan Aushadhi centres. Despite the laudable intent behind the Jan Aushadhi centres for enabling quality medicines access to the masses, there are issues in its planning and execution that need to be addressed to ensure seamless functioning of these centres.

Accesibility: Currently, there are 5000 Jan Aushadhi centres versus approximately 9,00,000 lakh chemists in
India, which makes their reach just about 0.5 per cent. So, in order to make even a dent in the Branded Indian Generic market, the number of stores will have to increase manifold.

Trained manpower: An industry source mentioned, that there is a lack of trained people manning these centres. People in charge are not knowledgeable about the medicines and lack the skills to manage these centres as a retail chemist shop. A rapid increase in their numbers will result in the need for skilled manpower to manage the Jan Aushadhi stores.

Quality perception: In the customer’s mind, price reflects quality. Low prices could set perceptions about the quality, and for a layman seeking medicines for disease treatment, the perceived risk of taking a ‘cheap’ medicine may not be worth taking.

Physician endorsement: Even if the government makes it mandatory for the physician in government hospitals to prescribe generic medicines, without the assurance of quality checks, the doctors may be reluctant to take the outcome risk because of the quality of medicines. So then how can the Jan Aushadhi scheme be successfully implemented? The government needs to keep some crucial parameters in mind to ensure successful implementation of Jan Aushadhi, like.

Location selection: Jan Aushadhi centres should be opened in high traffic zones and not necessarily in places with a population of lower income. In every city, we see urban deserts where people of various socioeconomic status are living next to each other wherein people of lower economic strata do not have access to cheaper medicines.

Marketing: Government should market Jan Aushadhi stores at a scale similar to other national programmes like Pulse Polio. The positioning of Jan Aushadhi stores should not be restricted to cheaper medicines for poor people only but for all those people who are seeking to reduce their medicines burden by making a sensible choice. We must remember that the poor working class today has high aspirations, which is being reflected in their purchase of education, consumer goods, and even healthcare.  Just being cheap will not drive purchase unless they see that people of all classes purchasing medicines from the Jan Aushadhi stores. Also, the government should endorse and stand behind the quality of these medicines.

Manpower skilling: With each centre, the government will have to invest and take responsibility of skill building inpeople who run the centres. The skills should include hard skills like inventory management, record keeping, etc, along with soft skills of customer management.

Streamlining the process: These processes include procurement and supply of medicines to the various centres. Procurement criteria should be sharply defined- not just based on the price but also weightage should be given to the supplier credentials and history along with laid down KPIs for quality checks. With wafer thin margins of 10 per cent for the centre, centre servicing is very critical. The complete availability of the medicines has to be ensured as the patient would like to purchase all the medicines on the prescription from one point only. A lack of complete availability will deter the patient from coming into a Jan Aushadhi centre again. The return of expired or non-moving stocks from the chemist to the procurement also has to be seamless in order to make the centre viable.

If the government can up the game on all these four fronts, then the Indian Pharma companies will have to actually look beyond the pill and become more patient-centric. The paradigm shift that the brand is not just the generic drug with a brand name but an entire promise and a set of experiences, which will help the patient to manage her disease or condition better and substantially impact the quality of life. The pharma industry will have to use the 4Ps of marketing to drive these changes.

Product — The brand will encompass the promise of a set of experiences which will help improve the quality of life to the patient.

Price — The price will be more of value-based pricing rather than only cost-based.

Promotion — The current promotion is heavily skewed towards physicians engagement. Both marketing communication, as well as promotional spend, will be channeled more towards real-world evidence building, understanding patient insights and engaging the patients on their journey.

Place — With the advent of e-pharmacies, the customers will be sharply segmented between who buy from the regular brick and mortar stores to those who buy online. Pharma companies will need to be agile to balance this transition.

Summarising, any product category that caters to customer segments is sharply defined by socioeconomic and psychographic segments. One size rarely fits all. The scaling up of the Jan Aushadhi scheme in the lines discussed will cater to a different set of customers while the branded generic industry will have its own set of customers and both will be needed to ensure access to healthcare for India.

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