Drug distribution in India is layered and regulated. Unlike in the West, where a manufacturer can directly supply goods at the retail level, products in India move through a chain of intermediaries.

The manufacturer supplies goods to the first layer comprising a clearing and forwarding agent, a super stockist or a company-owned depot. These, in turn, supply to stockist from whose premises goods are routed to wholesalers, medical institutions, hospitals and retailers. The retailer dispenses the drugs to final consumers. Manufacturers can directly supply to institutions and hospitals, but never to a retailer.

Channels of drug distribution

There are seven strategically located medical stores organisations, which supply to government hospitals and dispensaries in rural and suburban areas. These organisations procure goods directly from companies by inviting tenders so as to keep the costs low. Government hospitals and institutions also invite tenders. Some private institutions also go in for tenders while the majority negotiates with companies to discount stockist and chemist margins in addition to bulk purchase discounts.