Private pharmacy chains warming up to unbranded generic medicines

Private pharmacy chains are warming up to the idea of generic generic medicines, an area thought to be the government’s stronghold through Jan Aushadhi stores. There are around 5,000 Jan Aushadhi stores in the country, and this week the central government said it aimed to open another 2,500 by 2020. 

Generic drugs are copies of patented drugs after the patent is gone. There are two types of generic drugs, branded and unbranded. Generic medicines might or might not have a trade name as opposed to branded generics. They are manufactured by small and large pharma companies alike but are not marketed through doctors — these are rather pushed directly into the trade. 

For big pharma firms, it is a volume game. They sell these directly to the trade after adding a certain margin. From the first point of sale (distributor or stockist) to the consumer, the margins in this segment can vary from 20 to 90 per cent, according to the industry.  Thus, private chains such as Generico and StayHappi Pharmacy see an opportunity and are aiming to expand rapidly over the coming months. 

“There is a real and unmet need for quality affordable drugs and the options are not available before the patient,” said Sujit Paul, managing director of Sarva Gun Aushadhi which runs the StayHappi chain. 

Since May 2018, he says, they have reached a little over 135 operational stores; 297 franchises are to come on board shortly. “We are the only pan-India generic-generic pharmacy chain. We chose to expand through the franchise route, unlike the traditionally preferred company-owned and company-operated stores,” he added. 
 

StayHappi has former Indian cricket captain Sourav Ganguly and popular actor Vidya Balan as brand ambassadors. It is running social media and neighbourhood campaigns to popularise the concept. Self-funded, it has not raised other funds so far. 

Generico, started by Indian Institute of Technology alumni, has raised $4.5 million (nearly Rs 32 crore) in seed funding and Series-A rounds since 2017 led by Tomorrow Capital (a $100-million and early-stage consumer venture capital fund) and Whiteboard Capital (founded by Sandeep Tandon) and supported by marquee angel investors Kunal Shah (co-founder of Freecharge), Nitin Saluja (co-founder and chief executive of Chaayos, the tea cafe chain), and Gagan Goyal.  It aims to raise a sizable amount in Series-B funding in 2019 as it readies a plan to expand across Maharashtra. Generico has not opted for the franchise route; it now operates 27 outlets in and around Mumbai. The plan is to grow to 100 outlets across Mumbai by 2019-end. 

Generico founders Siddharth Gadia and Girish Agarwal say: “The total market size of generic medicines in India is around Rs 1.1 trillion, dominated largely by branded generics which hold 90-92 per cent. Generic generics are the other eight to 10 per cent. With over 900,000 retail outlets, of which, organised chains form three to four per cent, the market is poised to grow 15 per cent annually and organised retail pharmacies at 35-40 per cent. Within that, we believe there is room for everyone to grow.”

What are generic generics?
 

| Generic medicines are copies of patented drugs after the patent expires

| There are two types of generic drugs — branded and unbranded

| Unbranded generic drugs are also known as generic generic medicines

| Government’s Jan Aushadhi stores are selling generic generic drugs

| Generic generic medicines might or might not have a trade name

| Apart from PSU drug companies, private firms also make generic generic medicines

| They do not market it through the doctor channel but push directly to trade