Reduce stockists inventory, ensure supplies to plug medicine distribution gaps: report  make unique title from original. The maximum number of words is 16.

Despite a two-month inventory of medicines, chemists are unable to provide a particular brand about 28 percent of the time, finds a study on the distribution gaps in the medicine supply chain.

Drug companies could well double their profits, if they took control of their distribution channels, have reduced inventories at the stockists, supported however by nimble supplies by the companies, said Chandrachur Datta, Partner, Vector Consulting Group, and one of the authors of the study.

The distribution gap happens despite companies holding approximately 50 days of stock on an average, he said, pinpointing a “capital crunch”at the stockists level – where they do nothaveenough funds to extend credit to the chemists. And this impacts the inventory of certain products and the range of products stocked as well, he told businessline.

Addressing the stockists situation involves no additional investment, and could in fact result in a doubling of profits for companies, he added. The study covered 934 chemists, 68 stockists and key brands with the top 20 companies that included domestic and multinational companies, he said.

In it’s whitepaper on the issue, the consulting firm said, “companies maintain high inventory levels in the supply chain (5-15 weeks) and distribution network (2-7 weeks)”, to address the distribution gap. This strategy, though, “does not prevent sales losses and instead creates risks of product obsolescence and expiration, resulting in significant write-offs (4 percent-10 percent),” it added. “The growing variety of prescribed brands and the limited working capital of chemists create a need for frequent deliveries,” the report noted.

“Companies should allow stockists to reduce inventory per product while ensuring daily availability. This would free up capital, enabling stockists to handle more divisions. As stockists carry a wider range of therapeutic divisions, companies will expand their reach to more chemists through more stockists,” it said, and this would help ensure higher fulfilment of prescriptions, it added.