Last August, Minister of State for Chemicals and Fertilisers Mansukhlal Mandaviya told Lok Sabha the government would open 3,000 stores under the Pradhan Mantri Jan Ausadhi Yojana (PMJAY) by the end of the fiscal year. Four months past the deadline, the target is far away — 1,736 stores as of June 22. A rapid launch of new stores, a handful of distributors and a very low store density have together created a vicious circle of low demand and inadequate supply.
Launched in 2008 by the UPA government to pump up the market for generic drugs and bring down out-of-pocket expenditure on healthcare, Jan Ausahi had remained a largely neglected scheme — there were only 182 stores until July 2015, only 111 functional — until it was rechristened with the PM’s name and a decision taken to step up store opening through a slew of incentives. In August 2016, the total was 408 stores.
On January 25, the owner of a PMJAY store in Thirumala wrote: “Your office is concentrated on opening maximum Jan Ausadhi stores in Kerala, not concentrating on the supply of medicines and income of shop owners… I got informed that more than three shops are already sanctioned within 2 km radius. So my humble request is to please arrange supply of medicines in existing shops. If sale is increasing we can allot second shop even in next to my doors, I have no problem.” The e-mail is addressed to the CEO of Jan Ausadhi and officials of the Bureau of Pharma PSUs of India (BPPI) responsible for implementation of PMJAY at various levels.
On June 13, Ramesh Mehta of Mehta Exports, BPPI distributor for Gujarat, wrote an email opting out of the scheme citing “pending issues”. While senior BPPI officials say they have no idea what the problems were, Mehta’s earlier emails listed grouses such as: “We are getting 15 cheques return of PMJAK monthly. Each transaction bank charge us Rs 300. We are getting short and breakage qty/boxes from CWH…as per your software limited rights we can create only 7-8 invoices daily against 86 stores.”
New stores are literally being opened every day but with just 45 distributors servicing the entire range — 1-2 per state — it is a challenge to to ensure all stores have the entire range of 580 Jan Ausadhi products. “One of the issues we have is in reaching of stocks from the central warehouse to the actual stores, reason being that the number of products we have. Orders from distributors are not to the level of the products that there are. Only one-two distributors cater to entire states.
Having captive stores is central to planned orders. We have just 1,736 stores while there are 8 lakh chemists in the entire country. It is a growing business model and our challenge is to resolve these issues and make a tangible difference in the cost of healthcare,” says Biplab Chatterjee CEO of BPPI and PMJAY. Among the options BPPI is exploring is routing drugs directly to stores. There are issues in the opening of new stores — the health ministry is reluctant to compromise on the need for pharmacists at every store, while the chemicals & fertilisers ministry feels paying a qualified pharmacist would make the stores nonviable.
BPPI provides a one-time assistance of Rs.2.50 lakh as furnishing and establishment costs, start-up cost for setting up a Jan Aushadhi Outlet. A margin of 16% on the sale price is built in the MRP of each drug. In addition, the stores are eligible for incentives linked to sales, subject to a ceiling. In case of stores opened in Northeastern states and other difficult areas i.e., Naxal-affected areas, tribal areas etc, the incentive is higher.
Officials argue that unless density of PMJAY stores increases there will not be a captive clientele and unless stores have the full range of products they will not have footfall. On the other hand until there is adequate demand, distributors will not stock up — the flip side is that because they are not stocking up products are not reaching the stores so that even the small clientele is moving away. Besides, the software for stock update is prone to glitches. “We are looking for a better software,” Chatterjee said. UP currently has 242 stores under the scheme, the highest, followed by Kerala with 235; Bengal has just 6, Manipur 5 and Mizoram 4.