Fmcg Firms Get Hooked On Chemists
If you thought that your chemist down the road made money only by selling prescription drugs _ think again. According to a survey conducted by ORG-MARG, the turnover of chemists across the country has taken a dramatic turn with as much as 45 per cent of their turnover coming from FMCG products. In metros (23 towns with a population of more than 10 lakhs) the proportion of business from sale FMCG, according to the study, has gone up to as high as 55 per cent.
The study highlights the growing importance of the chemist shop as a distribution point for companies. As a result of greater competition from the increasing number of FMCG as well as OTC (Over The Counter) products pharma companies are facing problems to stock their products.
The penetration of FMCG products in chemist shops clearly bolsters the trend. The market research agency's study is based on data collected from over 2 lakh chemist shops across the country. It points out that as much as 75 per cent of them stock premium soaps as well as toothpastes, 55 per cent of them stock talcum powders, another 55 per cent stock beverages,50 per cent of them keep shampoos over 50 per cent stock hair oils and under 30 per cent keep popular soaps.
The importance of the FMCG products in the chemists kitty is again seen in the growth of these categories in 1999 over the previous years. For instance jams and jellies sales grew by 18 per cent, toffees by less than 14 per cent biscuits by over 12 per cent amongst others.
What is more significant is the fact that chemists are selling more and more of OTC products-which is one reason why many pharma companies are looking at this route to sell some of their earlier ethical products.In 1999 the all India OTC market was Rs 2,652 crore out of which the offtake of chemists of these products was a substantial 40 per cent .
The study also brings interesting insights on the buying pattern of chemists across the country. The inference is that chemists are preferring to keep a much wider range of products than more of a similar product pack. For instance while the number of packs stored by the retailer has gone up by 7.8 per cent between 1998 and 1999, the number of purchases per pack has grown only by 0.8 per cent in the same period.
The intensity of competition is also reflected in the increase in the number of promotion schemes being offered by pharma companies to retailers. The number of promotional schemes went up from 9336 in 1997 to 11020 in 1998 and as much as 11,485 in 1999.
The research study also brings about the fact that there is growing competition among pharma companies at the retailer level to push their ethical brands. A prescription analysis across metros and town classes in category 1 in 1998 over the previous year shows that amongst the top 10 pharma companies only one company was able to persuade doctors to write more of their brands between the two years. While in the next top 90 companies ,a good 22 per cent could improve their per capita prescriptions of their drugs over 1998.
The ORG study also looks into the contribution of new drugs and formulations to the pharma market. The surprising conclusion for 1999 is that only 2 per cent of the volume growth of the pharma industry came from the launch of new products which is substantially less than its normal contribution of around 10 per cent of the volume growth in the previous years.
The conclusion is clear: in 1999 pharma companies have tried to consolidate their markets by trying to maximise the potential of their existing products rather than go in for new investments in terms of new introductions. Again in amongst the top 300 prescribed brands 53 per cent could actually hold on to the doctors pen and have an increased per capita with 49 per cent increasing their prescription base.