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Providing generic medicines to the poor in India: An overall assessment of

government-run generic medicine scheme Pradhan Mantri Bhartiya
Janaushadhi Pariyojana (PMBJP) with refere...

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 ISSN 0975-2366
Research Article https://doi.org/10.31838/ijpr/2019.11.02.004

Providing generic medicines to the poor in India: An

overall assessment of government-run generic
medicine scheme Pradhan Mantri Bhartiya
Janaushadhi Pariyojana (PMBJP) with reference to
the experience of store owners in the city of Jaipur.
Manoj Pareek1*, Dr. M. Prakash2
1
Assistant Professor, Manipal Academy of Higher Education (formerly Manipal University), Research Scholar,
Tumkur University, Tumkur, Karnataka Email id: [email protected]
2
Professor Commerce and Management, Bangalore Email id : [email protected]
Received: 23.01.19, Revised: 03.03.19, Accepted: 12.04.19

ABSTRACT
Out of Pocket expenditure on medicines constitutes more than 50% of healthcare expenditure in India. The poor are
most affected as branded medicines are expensive and treatments involving the use of such medicines pushes them
further into poverty.To address this issue government central government started Jan Aushadhi (Medicine for the
masses) programme in 2008 with the objective of providing quality medicines at affordable prices. The programme
envisaged the sale of generic medicines through stores to be called "Pradhan Mantri Janaushadhi Kendras” in various
districts of the country.This paper seeks to examine and assess the successes and failures of the government
initiatives so far, impact on the beneficiaries, challenges in execution and the way ahead.

Keywords: Generic Medicines, Jan Aushadi, Pharmaceuticals, Healthcare, India

INTRODUCTION
Generic medicines are drugs which contain the same overall healthcare expenditure for the population.
chemicals they had when they were originally To provide quality medicines to the population
developed and patented. Once the patent for these especially the poor the government through the
medicines expires these can be manufactured by any department of pharmaceuticals (DOP)launched
other manufacturer for sale. Generic drugs are came up generic Medicines stores in India in April
lower priced than branded drugs as making them 2008 called the Jan Aushadi Stores where generic
requires only cost of raw material no developments medicines are sold at lower prices in comparison
costs are borne by later manufacturers of the same. with branded equivalents. The chart below in
A lot of pharmaceutical manufacturers brand and Figure 1 shows the role of DOP which supplies
sell these drugs at high prices and prices vary these medicines by procuring them from public
according to the brand name associated with such sector companies.
drugs. Cost of medicines is a key constituent of

Ministry of Chemicals and

Fertilizers

Department of Pharmaceuticals
National
Pharmaceuticals PSU Division R & D Division Pharmaceuticals
Industry Division National Institute Pricing Authority
Bureau of Pharma
PSU’s in India of Pharmaceuticals (NPPA)
Private Pharma
(BPPI) Government Education and
Companies Owned Pharma Research (NIPER)
companies

Figure 1: Regulatory Framework of the Pharmaceutical Industry in India

Source: Annual Report 2016-17 Department of Pharmaceuticals

32| International Journal of Pharmaceutical Research | April- June 2019 | Vol 11 | Issue 2
 Manoj et al / Providing generic medicines to the poor in India

Need for Generic Medicines nearly 70%, which is very high in comparison with
countries world over. The pie chart in Figure2 below
High out of Pocket expenditure on Medicines illustrates the same.
Out of pocket expenditure out of total expenditure
done by citizens themselves on medicines in India is

Figure 2: Out of Pocket Expenditure on Healthcare by Providers (2013-2014) percentage

Source: Household Health Expenditure India, (2013-14) December 2016 National Health Accounts.

51% of the healthcare expenses, which are out of reimbursed personal expenses on visits and various
pocket, go towards buying medicines The day to day other forms of inducement. to prescribe such drugs.
savings of the poor are depleted by buying Higher Margins of Private Pharmacies
unaffordable medicines. Private pharmacy outlets earn from 30 % to as high
Widespread poverty in India as 200 % which is much higher than a Jan Aushadi
India faces poverty as one of its biggest problems, or generic store owner who earns only 20%. On the
though it is among the fastest-growing economies in sale of surgical items margins are in the range of
the world. It had a growth rate of 7.11% in 2015 and 70% to 100%. They are the most unlikely
has a big consumer market. participants to stock and sell generic medicines.
India's poverty rate for period 2011-12 stood at Therefore, there is a need to encourage generic
12.4% of the total population or about 172 million stores in India.
people; taking the revised poverty line as $1.90 as A profit-driven pharmaceutical Industry
enunciated by the world bank. The need to dispense Indian Pharmaceutical industry clocked a turnover of
generic medicines becomes critical in such a Rs.1853 billion with profit to the tune of 217 billion
scenario. in 2015. The pharmaceutical industry wants to keep
The rise in the Prevalence of Lifestyle-Related medicine prices high to earn maximum profits. The
Diseases price paid by the final consumer is far greater than
With the rise in prosperity of a certain section of the cost of manufacturing and distributing the same.
society, rapid urbanization, pollution, physical
inactivity increasing use of tobacco and alcohol and Material and Methods
changing food habits have led to the arrival of non- To study the impact of the scheme we went through
communicable diseases in India. Medicines for primary data collection by way of a survey of store
hypertension, cholesterol-lowering drugs, insulin, owners of Jan Aushadi Kendras and secondary data
thyroid medicines, etc. have to be taken on a daily available in public domain for assessment of the
basis by a large population until the end of their impact of the programme.
lifespan. Collection of Primary Data and Secondary Data:
Unethical Behavior of Physicians Primary Data: To study the impact of the scheme we
A certain section of doctors has a bias towards went through primary data collection by way of a
prescription drugs with branded names. The Indian survey of store owners of Jan Aushadi Kendras by
pharmaceutical industry influences the medical administering a questionnaire
professionals i.e. the doctors. The patients as a Secondary Data: To study secondary data available
consequence have to consume the drugs as in public domain as published by the government for
suggested by the doctors. They are given gifts, assessment of the impact of the programme. These
holidays disguised as medical conferences, include annual reports published department of

33| International Journal of Pharmaceutical Research | April- June 2019 | Vol 11 | Issue 2
 Manoj et al / Providing generic medicines to the poor in India
pharmaceuticals and data as available on Jan stores regularly are aware of lower costs of
Aushadhi website of the government. medicines more than knowledge of generic medicine
Statistical Methods: The study has used descriptive itself. The generic store is perceived as a low-cost
statistics as the sample size was finite and small. We government shop and economic necessity drives
have not used inferential statistics to analyze the data customers to them more than understanding the
The data analysis has been done through a simple difference between branded generic medicines and
average and percentages. generic medicines per se. On being asked whether
Sample Size: 10 stores in Jaipur urban area were they were stocking medicines of private
covered for the survey The reason behind low sample manufacturers. All of them were selling branded
size is that only such 14 stores are running in Jaipur generic medicines of private manufacturers. When
district, rural and urban. probed on the reason for selling the same. Non-
Data Collection Mode: A face to face interview was availability and shortage of medicines was the
conducted in the city of Jaipur with a view to taking reason for the same. 30% of them gave the reason
their inputs and views about the how their business that medicines which are non-generic and not
was faring and what they thought of the Jan Aushadi available in stock are made available to customers.
scheme. The State of Rajasthan has 105 stores at the This was done in the interest of the customers. Also,
end of 31.12.2018. Jaipur, the capital of Rajasthan prescriptions sometimes contained generic and non-
has 14 Jan Aushadi stores. Out of this 10 stores are generic medicines. 20% of the medicines they
within the city of Jaipur and the remaining are in stocked were not provided by the government
Jaipur District covering the satellite towns/villages of channel. The margin on sales was fixed at 20 % and
chomu, jalsu, bassi and kotputli. A questionnaire was all of them were able to earn the additional incentive
administered to 10 such Kendras in city limits linked to sales of 15%. Current margins on the sale
excluding satellite town and villages in the district. of 20 % should be increased to 40 % as private
The questions were a mix of close-ended for pharmacies enjoy higher margins. Expired medicines
estimation of numerical percentages and open- are not returnable resulting in losses incurred by
ended to know to the overall perception of the store owners as in case of private pharmacies There
scheme and issues facing the store owner. is need to increase credit period for payment after
Inputs collected from respondents: the supply of at least 30 days to generic stores to
The aim was to elicit answers to the following meet working capital requirements as enjoyed by
questions from these owners regarding the following. private pharmacies.All of the store owners
a. Type of Physicians prescribing generic medicines. complained about was the delay in the supply of
b. Whether doctors working in government hospitals medicines experienced by them. There were certain
were prescribing such medicines or doctors medicines with a perennial shortage. Apart from
working in the private sector where also medicines, surgical items were in severe shortage.
prescribing the same Most of them suggested the same medicine is
c. Do patients believe in the efficiency of generic manufactured by multiple state-owned companies
medicines? can help to overcome shortages. Location played an
d. Do Jan Aushadi stores stock branded generic important role in the success of a store. Stores near
medicines? if so what is the total proportion of the vicinity of a hospital had more footfalls. Stores
such in their total sales? inside the hospital's premises have benefitted the
e. What are problems faced in running such stores maximum. Overall the store owners were not happy
and what are success factors? with the returns and monthly profits generated from
f. Are they able to qualify for the additional the stores especially those run away from hospitals.
incentive on sales given by the government? The private pharmacies still were doing brisk sales in
comparison with Jan Aushadi stores. 60% of them
Results felt they were not earning enough in comparison with
It is mandatory for government hospitals doctors in private pharmacies.
Rajasthan prescribe generic medicines only. Further
Medical Council India (MCI) guidelines in 2016 Assessment of the scheme through secondary data
made it mandatory for all doctors to prescribe available in the public domain
generic medicines only. According to 80 percent of Rapid growth in the number of stores and sales
the store owners, 70% of the prescriptions of generic revenue
medicines were prescribed by government doctors There has been phenomenal growth in the number
employed by state-run hospitals. Only 30% of the of stores. Table 1 below clearly shows the same.
prescriptions came from doctors in private practice From mere 269 in 2016 stores to 4677 stores by end
and working with private hospitals. Private of December 2019. It is clearly evident the scheme
pharmacies are very unhappy with the advent of has been able to generate interest in entrepreneurs
generic stores as it had decreased their business. and coverage across India is increasing. Further
Patients are made aware of the medicines by sales numbers show an increasing trend from 30
doctors. Customers who have visited the generic

34| International Journal of Pharmaceutical Research | April- June 2019 | Vol 11 | Issue 2
 Manoj et al / Providing generic medicines to the poor in India
crores to 208 crores in by Q3 of the financial year
2018-19 as shown in Table 2 below.

Table 1: Growth in the number of Jan Aushadi stores (2015-19)

Year No. of Jan Aushadi Stores Growth %
2015-16 269
2016-17 1080 301
2017-2018 3561 230
2018-19 4677 31
(for 2018-19 as on
31.12.18)

Table 2: Growth in Sales through Jan Aushadi Stores (2015-19)

Year Jan Aushadi stores (Turnover in crores) Growth %
2015-16 30
2016-17 100 233
2017-2018 130 30
2018-19 *208 60
*( for 2018-19 as on 31.12.18)
Low revenue per store
We examined the revenue per store we find this is dismally low. Rs. 30417/- is the monthly revenue generated
per store in 2017-18. This is shown in Table 3 below.

Table 3: Revenue per Jan Aushadi store (2015-19)

Year No. of Jan Aushadi Stores Turnover Revenue per store(In lakhs)
2015-16 269 30 11.15
2016-17 1080 100 9.25
2017-2018 3561 130 3.65
2018-19 4677 208 4.45
(for 2018-19 as on
31.12.18)
Source: http://janaushadhi.gov.in and https://www.facebook.com/pmbjpbppi

Table 4: Incentive in the revamped Jan Aushadi scheme from September 2015

No. Incentive Type Change

1 Application form Cost of INR 2000 Waived
Opening Store in government premises like
2 No rent and
Government hospitals/ medical
colleges/Railways/State Transport/ Co-operation/ Subsidy of INR 2.5
Municipalities/ Post offices etc. Lakhs in setting
the store
Stores run by private INR 2.5 Lakhs
3
entrepreneurs/pharmacists/NGOs/charitable Subsidy
organizations
15% additional with
4 Additional incentive on sales
a cap of INR 10000

Revision in Margin
5
(a) Retailers 16% to 20 %
(b) Distributors 8% to 10%
Source: Annual Report 2016-17 Department of Pharmaceuticals

35| International Journal of Pharmaceutical Research | April- June 2019 | Vol 11 | Issue 2
 Manoj et al / Providing generic medicines to the poor in India

Revamping of the scheme in 2015 with additional incentives to new entrepreneurs

To start with the Jan Aushadi programme did not take off as planned at end of 2016, there were only 269
stores on pan India basis. The department of pharmaceuticals revamped the scheme and came up with a new
strategic action plan in September 2015 which involved providing incentives to entrepreneurs starting the
stores. The effect of the same can be seen in the increase in growth in 2017-18. Table 4 below shows the type
of incentives given to for setting up and running the stores to entrepreneurs applying for the same.

Poor health of government manufacturers of medicines except for Karnataka Antibiotics and Pharmaceuticals
Ltd
Table 5: Brief Accounts of Public Sector Manufacturers
Company HAL IDPL RDPL BCPL KAPL
Established 1954 1961 1978 1980 1981
Classification Sick Sick Incipient Sick Sick Profit making
Net worth (in cr) -488.1 -7147 -24.65 -184.6 127.81
Turnover 15.12 84.22 36.53 88.19 326.9
Liabilities(in cr.) 1250 10779 121 231 9
Loss/Profit -52.43 11.33 -13.5 13.33 33.97
(from Operations)

Source: Annual Report 2016-17 Department of Pharmaceuticals

The government is buying medicines from private manufacturers for meeting the rising demand for such
medicines.

Conclusion medicines especially in case of anti-cancer and

In a country like India, there is a need for lifesaving drugs. There is a need to build a
government intervention to make medicines monitoring mechanism to know whether the
affordable. It is more in case of poor and vulnerable physicians are prescribing generic medicines or not
sections of our society. The private pharmaceutical to their patients as this has been made mandatory by
industry cannot be expected to help the government the government. The pharmaceutical companies
in objectives of social good and welfare of the need to be questioned on their promotional
masses. We should take learnings from the unethical expenditure done in the name of sponsorship of
unscrupulous pharmaceutical industry of the USA as medical conferences. The doctor pharma company
an example and take corrective actions. We cannot nexus needs to be broken by enacting legislation
leave our population at the mercy of pharmaceuticals where an audit of accounts monitors incentives paid
companies in the name of Free market economy. to the medical community for increasing sales in
There is a need for more capital infusion in state- name of promoting medicines. The government had
owned pharma companies and if need be new recently launched ayushman bharat scheme which
companies should be started by the government. The aims at universal health insurance coverage for
government efforts in this direction need to lauded Indians and on meeting hospitalization expenses. Jan
but there is room for more investment in both Aushadi programme has to go together with
manufacturing and increasing awareness of generic Ayushman Bharat scheme as out of pocket
medicines. The rapid growth in sales and number of expenditure is not reimbursed through health
new stores being opened speaks for itself of the good insurance in India. Jan Aushadi programme,
intentions of the government. But the sale per outlet therefore, becomes more important in light of
is dismally low. What we infer from the same is the ayushman Bharat scheme. There is a lot of work to
earnings from these stores are not attractive enough be done on ground level by the government to
for the entrepreneurs for growth and sustainability in ensure the success of the scheme. No matter how
the long term. All entrepreneurs whether engaged in good a plan is if the plan is not executed well it will
social good or not are looking at return on yield no results. That exactly seems to be the case
investment and same is the case with Jan Aushadi currently with Jan Aushadi programme.
store owners. There is a pandemic shortage of
medicines, delayed and slow supplies from the Conflict of interest
government at generic stores. More Production of The authors report no conflict of interest. The authors
generic medicines is required to meet alone are responsible for the content and writing of
demandGeneric stores have started storing and this article.
selling branded medicines and this is a big setback
to this revolutionary scheme. Patients cannot wait for
36| International Journal of Pharmaceutical Research | April- June 2019 | Vol 11 | Issue 2
 Manoj et al / Providing generic medicines to the poor in India
Source of Funding 5. Pradhan Mantri Bhartiya Janaushadhi Pariyojana.
No financial support or sponsorship was obtained for (2019). Retrieved from
this research from any source https://www.facebook.com/pmbjpbppi
6. Jangra, S., Bhyan, B., & Nair, A. (2018). Perception of
Ethical clearance generic drugs among general populace visiting a
The respondents to the survey in the research were community pharmacy Jaipur, Rajasthan. Journal of
informed about the purpose of the research and their Drug Delivery and Therapeutics, 8(6), 192-194.
consent was obtained before inclusion in the survey. https://doi.org/10.22270/jddt.v8i6.2040
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