Wastage In Channel At Retail Level

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

SUPERIOR GROUP OF COLLEGES A Project Of South Asian Educational Promotion Network

MARKETING CHANNEL

The Leaders MBA Professional (Evening) Section

X

Session

2007-09

Submitted To: Mr Nouman Bhatti Group Profile MARKETING CHANNEL

1

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Group Name

The Leaders

Group Logo

Group Slogan

DARE TO LEAD

NAME

ROLL NUMBER

KHALID AZEEM

8257

BILAL RASHEED

8231

AHMAD KHAN

8259

FARHAN BUTT

8227

AHMAD IKRAM

8278

MARKETING CHANNEL

2

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

DEDICATION We are dedicating our work to our parents and respected teacher PROF. NOUMAN BHATTI, who have played a vital role in our studies and have guided us at every step with their precious ideas. No doubt this dedication is insufficient and we can never repay for the role they have played in our studies but we are sure that his work will prove itself an asset in our life.

MARKETING CHANNEL

3

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

The wastage in WHOLESALER & DISTRIBUTOR level with respect to pharmaceutical is measured with following factors.  General introduction 

Management at DISTRIBUTOR & RETAIL level

 Purchase decisions  Non-Availability  Reorder Method  Expiry issues  Breakage of medicines  Return and replacement issues  Inspection  Legal obligations We have adopted following methodology to interpret the survey and determine the results. o Questioner development o Data collection from retailers o

Quantitative evaluation by Spss.

MARKETING CHANNEL

4

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

o Result interpretation o

Suggestions and recommendations

Introduction Pharmaceutical industry is one of the major industry in Pakistan .The purpose of pharmaceutical is to produce medicines, to cure sickness. Like other industries pharmaceutical is also providing medicine to their consumers through proper channel. The purpose of this assignment is to indicate the type and quantity of wastage at wholesaler & Distributor level. Wholesaler level is second last channel member of marketing channel. So pharmaceutical industry can have more market share by controlling wastage at retail level. Data collection on wastage We have prepared questionnaire consist on 35 questions. The questionnaire includes two Qualitative and quantitative. The questionnaire that we have prepared is following. We have gathered the data from following WHOLESALERS.

wholesaler Name

Address

Amir Medicine

Lohari Gate Lahore

Shamsi Pharmacy

Muslim Masjid Lahori Lahore

Amin Traders

Out side lohari gate Lahore.

Faisal Enterprises

Anarkali lohari gate Lahore

Khan Medicine

Lohari Markeet Lahore.

MARKETING CHANNEL New Quality Medicos

Out side lohari gate Lahore.

5

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Distributor name PREMIER AGENCIES VERTEX PHARMACEUTICALS DYNALOG SERVICIES COMPANY

How long you are running this store?

Amir Medicine

1- 2 years

2- 5 years

X

Shamsi Pharmacy

X X

Amin Traders Faisal Enterprises Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER) VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

5- above

X X X X X X

ANALYSIS About 78% wholesaler are operating more then five years .We have analyzed that most of the wholesalers we have concerned are doing business for more than five years which show the maturity and expertise of the wholesalers. So their experience will also be helpful for us to identify the wastage on wholesaler level. MARKETING CHANNEL

6

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

The distributors that we have taken are working more than five years How many Medicines do you have? 100-200 200-500

Amir Medicine Shamsi Pharmacy Amin Traders Faisal Enterprises

X X X X

Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER) VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

500- above

X X X X X

ANALYSIS 56% having the medicines in the range of 100-200. While 22% having medicines in the range of 200-500. The most of wholesalers have medicines in the range of hundred to two hundred this is because they try to stock those items which are not available there competing wholesalers nearby, Distributors work out with different companies so they have wide range of medicines.

MARKETING CHANNEL

7

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Do you purchase medicines from distributors?

Amir Medicine Shamsi Pharmacy Amin Traders Faisal Enterprises Khan Medicine New Quality Medicos

YES

NO

X X X X X X

ANALYSIS Most of wholesalers directly purchase medicines from distributors while there are some who purchase from open market. All the distributors are directly linked with company, they get the medicines from the factory and then contact the wholesalers to sale them.

MARKETING CHANNEL

8

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

How much staff do you have? 1-5

Amir Medicine

5-ABOVE

X X X X X X

Shamsi Pharmacy Amin Traders Faisal Enterprises Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER) VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

X X X

ANALYSIS Almost all the wholesalers have five individuals in staff. Distributors have the staff of approx. twenty to thirty representatives.

Do you hire untrained persons? MARKETING CHANNEL

YES 9

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

NO Amir Medicine

X

Shamsi Pharmacy Amin Traders Faisal Enterprises

X X X

Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER) VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

X X X X

ANALYSIS 58% wholesalers hire untrained individuals. Almost all the wholesalers hire untrained persons and they gradually train them while The Distributors mostly hire qualified and experienced individuals to perform the jobs.

.

What type of system you are using? MARKETING CHANNEL

COMPUTERIZE D

MANNUAL 10

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Amir Medicine

X

Shamsi Pharmacy Amin Traders

X X

Faisal Enterprises

X X

Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER) VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

X X X X

ANALYSIS Some wholesalers are using computerized system and some are not in other words the ratio is 1:1. It means that if 10 are using computerized system then 10 are using manual system. Those who are not using computerized system, intend to avail this facility in future. They also gave positive response to our suggestions to use a computerized system. All most all the distributors are using computerized system because they are attached to national and multinational companies so the do have to be updated in the sense of technology. It was also found that the distributors have provided their senior staff members with digital handheld computers.

Are you in The favor of Automated System?

MARKETING CHANNEL

NO

YES

11

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Amir Medicine

X X X X X X

Shamsi Pharmacy Amin Traders Faisal Enterprises Khan Medicine New Quality Medicos

ANALYSIS All the wholesalers are in the favor of automated system because it is time saving, efficient and effective for maintaining day to day transactions and ordering. They are also agreed to develop and automated business system.

How Much you have invested in Automated System.

MARKETING CHANNEL

1000020000

2000050000

50000ABOVE

12

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Amir Medicine Shamsi Pharmacy Amin Traders

X X X

Faisal Enterprises Khan Medicine New Quality Medicos

X

PREMIER AGENCIES (DISTRIBUTER)

X X X

VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

ANALYSIS The wholesalers have their software for record keeping. The two of first have invested 10000-20000 for it. While the distributor have invested 10.0000 above on software. According to above mentioned freq. table the wholesalers invested ten thousand to twenty thousand for automated system. And the distributors usually spend fifty thousand above to attain and install automated system.

How many distributors are supplying you?

Amir Medicine

MARKETING CHANNEL

1-5

5-ABOVE

X 13

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Shamsi Pharmacy

X

Amin Traders

X X X X

Faisal Enterprises Khan Medicine New Quality Medicos

ANALYSIS Wholesalers mostly have more than five distributors who provide them required (ordered) medicines. Do you think distributors are involved in corruption?

NO

Amir Medicine

X X

Shamsi Pharmacy

NORMAL SOMETIMES

Amin Traders

X

Faisal Enterprises Khan Medicine New Quality Medicos

X X X

QUALITATIVE ANALYSIS Thirty percent wholesalers claim that distributor is involved in corruption and remaining comment that distributor is not in to corruption. And the reason is those distributors have a proper network and supply chain, therefore the minimum corruption takes place.

MARKETING CHANNEL

14

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Distributors did not agree that they are involved in corruption because of a proper check and balance system.

NORMA L

Do you face theft issue by your workers?

MEDIUM

NO Amir Medicine

X

Shamsi Pharmacy

X X X

Amin Traders Faisal Enterprises Khan Medicine

X

New Quality Medicos PREMIER AGENCIES (DISTRIBUTER) VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

X X X X

QUALITATIVE ANALYSIS 56% of consulted parties don’t hire untrained persons, while other hires. As it is stated before that corruption is rare in both channels so it affects the sale less. Do you face theft issue by your Customers? Amir Medicine Shamsi Pharmacy MARKETING CHANNEL

NO

NORMAL

MEDIUM

X X 15

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Amin Traders Faisal Enterprises

X X

Khan Medicine

X X

New Quality Medicos PREMIER AGENCIES (DISTRIBUTER) VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

X X X

ANALYSIS Wholesalers and distributors both face very less theft by customers. It also results that theft issues by workers are faced by retail level.

Do you face shortage of medicine?

Amir Medicine Shamsi Pharmacy

MARKETING CHANNEL

NO

sometime s

some cause

X X 16

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Amin Traders

X

Faisal Enterprises

X

Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER)

X X X

VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

ANALYSIS Wholesalers and distributors both face shortage of medicine. During survey we came to know that companies their self sometimes create an artificial storage and hook the wholesalers The following medicine highly faced by shortage Tab Dexamathasone (Local) Tab Batnilon (Multinational) Tab Feno barbiton (Local) Tab Hyosine (Local) Tab penorit (mul;tinational) Inj pencilline (multinational) Inj Kanamycine (multinational) Which category of medicine is highly faced by shortage? Amir Medicine Shamsi Pharmacy

MARKETING CHANNEL

High/lo w Cost

Legal Action

Branded issue

X X 17

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Amin Traders

X X X

Faisal Enterprises Khan Medicine New Quality Medicos

X

PREMIER AGENCIES (DISTRIBUTER)

X X X

VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

ANALYSIS About 80% claimed that they faced shortage. Usually the shortage of branded medicines occur in the market. Both wholesalers and distributors claim to be effected by this.

How do You Decide Re-ordering? Amir Medicine

Computerize d

MARKETING CHANNEL

Other

X

Shamsi Pharmacy Amin Traders

Manual

X X 18

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Faisal Enterprises

X X

Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER) VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

X X X X

ANALYSIS Wholesalers usually reorder manually instead distributors have maintained management information system to reorder the medicines. When gave suggestions to the wholesalers about a computerized system most of them agreed to adopt the system.

Do you Sale on Credit Basis? Yes

Amir Medicine Shamsi Pharmacy

MARKETING CHANNEL

NO

X X 19

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Amin Traders Faisal Enterprises Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER) VERTEX PHARMACEUTICALS ( DISTRIBUTOR)

X X X X X X

DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

X

QUALITATIVE ANALYSIS A lot of Wholesalers do sell on credit bases as analyzed, but some of distributors do credit business and some do not.

The Price Range For Credit Basis Are?

1000020000

Amir Medicine

2000035000

35000Above

X

Shamsi Pharmacy Amin Traders MARKETING CHANNEL

X 20

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Faisal Enterprises

X X X

Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER)

X

VERTEX PHARMACEUTICALS ( DISTRIBUTOR)

X

DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

ANALYSIS Wholesalers do credit basis more than distributors in other words wholesaler has more investment as compared to distributor. And distributor give credit but at less ratios and recover it soon.

Do you face Breakage Problem Of Medicine Packaging?

Amir Medicine Shamsi Pharmacy

NO

Normal

X X

Amin Traders Faisal Enterprises

MARKETING CHANNEL

Medium

X X 21

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

Khan Medicine

X

New Quality Medicos

X

PREMIER AGENCIES (DISTRIBUTER)

X X X

VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

ANALYSIS Both channel members have almost normal breakage problem. Because the supply is in bulk so there is less chance of breakage, when it is in small units then there are more chances of breakage e.g. At retail level.

What is monthly breakage cost?

Amir Medicine Shamsi Pharmacy

500010000

1000015000

15000Above

X X

Amin Traders

X

Faisal Enterprises Khan Medicine

MARKETING CHANNEL

X 22

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

New Quality Medicos

X

PREMIER AGENCIES (DISTRIBUTER)

X X

VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

ANALYSIS 45% having brackage in the range of 5000-10000,while 27.5% having in the range of 10000-15000 and above. Wholesalers remarks are that when medicines move from company to retailer their breakage ratio increases it means that distributor have low breakage as compared to wholesaler and retailer.

Do you have replacement on breakage? NO

Amir Medicine Shamsi Pharmacy Amin Traders Faisal Enterprises

MARKETING CHANNEL

Medium

X X X X

Khan Medicine New Quality Medicos

Normal

X X 23

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

PREMIER AGENCIES (DISTRIBUTER)

X X X

VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

QUALITATIVE ANALYSIS Most of wholesalers claim that the have no efficient breakage facility on the other hand distributors sated that they mostly sort out breakage.

Do you share replacement with your customer? Amir Medicine

NO

X X

Faisal Enterprises

X X

Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER)

MARKETING CHANNEL

Medium

X

Shamsi Pharmacy Amin Traders

Normal

X X 24

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

VERTEX PHARMACEUTICALS ( DISTRIBUTOR)

X X

DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

QUALITATIVE ANALYSIS We have analyzed that the wholesalers only share the replacement of those medicines that the distributor gives them. And they do not share the breakage, in case of non availability of this facility

Do your distributor sort out brakeage problem efficiently.

Amir Medicine Shamsi Pharmacy Amin Traders Faisal Enterprises

NO

PREMIER AGENCIES (DISTRIBUTER)

MARKETING CHANNEL

Sometimes

X X X X

Khan Medicine New Quality Medicos

Normal

X X X 25

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

VERTEX PHARMACEUTICALS ( DISTRIBUTOR)

X X

DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

QUALITATIVE ANALYSIS Distributor stated that they always replace the breakage but the behavior of whole salers is entirely opposite that breakage is not replaced.

Do you have expiry problem.

NO

Amir Medicine

X

Shamsi Pharmacy

Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER)

MARKETING CHANNEL

Sometimes

X X

Amin Traders Faisal Enterprises

Normal

X X X X 26

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

X X

ANALYSIS The wholesalers claim that multinational companies don’t replace expired medicine. They have much problem in multinational medicines in case of expiry. But when we talk about national companies, they do replacement of expired medicines with wholesalers as well as distributors, Wholesalers also claim that most of the distributors don’t want to replace expired medicines. The distributors of pharmaceutical say that they always replace the expired medicines but the wholesaler have to inform them three months before the expiry date.

The Monthly Expiry Cost you faced?

500010000

1000050000

Zero

Amir Medicine Shamsi Pharmacy Amin Traders

X X

Faisal Enterprises

X X

Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER)

MARKETING CHANNEL

X X 27

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

VERTEX PHARMACEUTICALS ( DISTRIBUTOR)

X X

DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

ANALYSIS Wholesalers have the stock of expired medicine of multinational companies some wholesaler claims that they have the stock of expired medicine costing 2 laces. They are waiting for the response of the company that these might be replaced in future. Some wholesalers also put this matter in court the supreme court has ordered multinational companies to payback or replace the expired medicines but this order was be executed due to selfishness of the companies.

Which Type of medicine is Highly Expired?

Capsule s

Injections

Amir Medicine

X

Shamsi Pharmacy Amin Traders

Tablets

X X

Faisal Enterprises Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER)

MARKETING CHANNEL

X 28

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

VERTEX PHARMACEUTICALS ( DISTRIBUTOR)

X

DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

X

QUALITATIVE ANALYSIS The survey from Wholesalers proves that almost all the medicines have same expiry problem.

Does Drug Inspectors Monthly Visit Your Store?

NO

Yes

Amir Medicine Shamsi Pharmacy Amin Traders Faisal Enterprises Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER) VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR) MARKETING CHANNEL

Sometimes

X X X X X X X X X 29

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

QUALITATIVE ANALYSIS In the past the drug inspectors visit the wholesaler for their own interests, personal benefits, the system is gradually changing now the current situation is that the chief minister of Punjab has ordered drug inspectors and other medical teams to visit the wholesalers and distributors regularly. We also come to know that the team formed by chief minister visits thrice a week.

Do You face Bribery Causes W.R.T Drug Inspector?

NO

Amir Medicine Shamsi Pharmacy Amin Traders Faisal Enterprises Khan Medicine

VERTEX PHARMACEUTICALS ( DISTRIBUTOR)

MARKETING CHANNEL

Sometimes

X X X X X

New Quality Medicos PREMIER AGENCIES (DISTRIBUTER)

Yes

X X X 30

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)

X

QUALITATIVE ANALYSIS Wholesalers and distributors say that they do follow all the rules and regulations related to Drug Act so they don’t have to pay any bribe to any inspector. The wholesalers conclude that the trend of taking samples have also changed, in the past medical teems used to take so much medicine for sample testing purpose but now a day every medicine which is taken for testing purpose is recorded on a legal authentic document.

How Much you have to pay illegally. Amir Medicine Shamsi Pharmacy

1000020000

2000030000

Zero

0 0

Amin Traders Faisal Enterprises Khan Medicine New Quality Medicos PREMIER AGENCIES (DISTRIBUTER) VERTEX PHARMACEUTICALS ( DISTRIBUTOR) DYNALOG SERVICIES COMPANY ( DISTRIBUTOR) MARKETING CHANNEL

0 0 0 0 0 0 31

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

QUALITATIVE ANALYSIS In the past wholesalers had to pay illegally to medical teams but the environment has changed. Now a days they mostly don’t pay a single penny to any team.

Summary o

Through this research we have analyze that most of the wholesaler does not purchase medicines from open market ,so pharmaceutical industry should develop a strategy and proper channel to cash the wholesaler.

o

The wholesaler also have complain of corruption about suppliers, so their should be a monitoring system.

o

The maximum wholesaler is using manual system to re-order the medicines. So there is a need to create awareness about the fruitfulness of the IT technology. The distributor level is updated.

o The wholesalers mostly sale on credit bases but distributors try their best to deal in cash. o

The maximum wholesalers have brakeage problem of medicines while distributor don’t face this problem.

o

The government should take action against multinational companies and audit them to sort out their problem.

MARKETING CHANNEL

32

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

o

In the past wholesalers had to pay illegally to medical teams but the environment has changed. Now a day they mostly don’t pay a single rupee to any team.

o

In brakeage problem the replacement is available but in expiry issue most of distributors are disable.

o

The multinational medicines are mostly non available in market.

o Most of retailers have misperception about IT technology in the sense of VOLATILITY,EXTRA EXPENSE, Etc

MARKETING CHANNEL

33