Druggists' apex body to start 36 companies

The All India Organisation of Chemists and Druggists (AIOCD) is planning to float 36 companies across the country to ensure they are able to compete with the big players in the drug retail sector.

The first of these companies will be set up in Mumbai at an initial investment of Rs 50 crore, which will be raised from the 40,000 medicine wholesalers and retailers in Maharashtra. By March 2007, AIOCD hopes to raise Rs 100 crore, and Rs 500-700 crore by March 2008, to set up such companies in other states.

"Several financial institutions have already approached us. After raising the initial Rs 50 crore from retailers and wholesalers in Maharashtra, we will collect about Rs 500-700 crore to set up more such companies in every state and Union Territory in the country," says J S Shinde, AIOCD general secretary and president of Maharashtra State Chemists and Druggists Association (MSCDA).

The pilot project will take off in Mumbai under the aegis of MSCDA. The state druggist body will then set up another company in Pune and a third one in Nagpur.

These companies will later be merged under the MSCDA Ltd. Depending on the rate of success, 35 such companies will be floated across the country. AIOCD Ltd will be the holding company of all these firms.

"We have already acquired office space at Dadar and Parel in Mumbai. There will initially be 11 directors to be appointed by MSCDA. According to the need, the numbers of directors will be raised to 50," Shinde said.

The drug retail trade is currently worth Rs 50,000 crore in the country. This works out to $4 per person per annum. In 4-5 years, this figure is expected to double to $8 per person per annum. With India adopting GATT and WTO rules on January 1, 2005, foreign investment in retail trade has become inevitable.

Companies such as Appollo and Subiksha have already started selling drugs in metro cities. Besides, Reliance, Pantaloon, Godrej, and global giants like WallMart are waiting to enter the retail trade and spread their wings to small towns.

With huge financial resources to back them, the companies can start facilities like patient-counselling in their retail spaces. Existing retailers could thus lose businesses. The proposed company is AIOCD's answer to the these retail chains.

AIOCD is looking to protect the interests of drug retailers by centralising purchase of medicines. Although the company will initially focus on organised drug wholesale, it will branch into retail business later.

Also the company will make all data available online. Thus chemists from anywhere in the country can log on to the company's website and access data.

For providing better customer service, the AIOCD has also decided to lay more emphasis on continuing educational programmes to upgrade its members' skills and give them suggestions and help to serve customers most effectively.

"We have already started refresher courses which is yielding positive results and has created awareness amongst our trading community," Shinde said.

The AIOCD is the apex body of the largest trade organisation of the country. All state chemists associations are affiliated to the AIOCD.