Ranbaxy's OTC foray runs into rough weather

NEW DELHI: Ranbaxy Laboratories’ over-the-counter (OTC) consumer healthcare foray has hit a speedbreaker. Drug stockists are opposing tooth-and-nail the company’s proposal of lowering the margin and transferring the brands to stockists of fast moving consumer goods (FMCG).
Ranbaxy has decided to move its four old-time prescription brands - Revital, Pepfiz, Gesdyp and Garlic Pearls - to OTC segment.The launch was scheduled for October 1.
However, the OTC foray is facing a rough weather as All India Organisation of Chemists and Drugists (AIOCD) are opposing any lowering of the existing margin. “We are not agreeing to Ranbaxy’s proposal of reducing the margin to 3 per cent, from 10 per cent at present. Although negotiations with the company were on, there will be no compromise on this issue,� JS Shinde, general secretary of AIOCD told The Times of India.
Shinde said AIOCD will not allow any transfer of these four brands to FMCG stockists. However, Ranbaxy can add FMCG stockists for catering to areas where AIOCD is not present. According to Atul Malhotra, regional director, Ranbaxy, in case of Revital, (brand size over Rs 40 crore) both Ranbaxy and AIOCD have ‘in principle’ agreed to retain the same 10 per cent margin and sell it parallally through pharma and FMCG stockists. However, final paper agreements are yet to be done.
For other three brands, Ranbaxy is trying to convince AIOCD to transfer it to FMCG stockists as these brands have a lower Rs 3-4 crore turnover. Negotiations were on and a decision would be reached soon, Malhotra added. He agreed that invoicing of OTC brands has not been started because of negotiations and expected to start next week and ad promotions will be launched by the end of next week.
Malhotra further said that for new OTC brands to be added to the portfolio, Ranbaxy will offer a lower FMCG margin.