Let us start by understanding the concept of monopoly PCD pharma company in Indian pharma industry. The term PCD is defined as the process of propaganda and distribution of pharmaceutical products in the market. The two parties involved are the Pharma franchise company or Franchisor that give marketing and distribution rights to the second party which is the franchisee or distributor.Now, there are 2 ways via which the PCD pharma company could choose to have its pharma products marketed. One way is to have several distributors market pharma products in an allotted area to achieve a wider reach.
Another way is through monopoly. A good pharma PCD pharma company in India usually gives out monopoly distribution privileges to a distributor in the unrepresented area to reduce competition. This allows franchisee or the distributor to gain complete control of marketing and distribution without having to worry about sales targets.
How does “Monopoly” in pharma business work?
The process involves a distributor applying to the pharma franchise PCD company for distribution rights on a monopoly basis in his area of interest. A distributor would usually set up business in an area where he/she understands the demographics, has good local contacts with medical practitioners and has an idea regarding the demand for pharma products.
Even though the process is cost effective for both the pharma franchise company and distributor, there are certain disadvantages to the system.
Disadvantages of going “Monopoly”:
- The distributor could make profits by establishing working relationships with the doctor and the chemist. The distributor could start out by asking a doctor to prescribe medicines that the distributor sends to the chemist at a profit margin. The loophole occurs when the chemist gets a better profit margin from another distributor in the same area for same products and therefore ends up doing business with the other distributor instead.
- The pharma franchise company may suffer if the distributor is not making sufficient profit with the current company and therefore decides to collaborate with a new pharma franchise company instead.
However, mutual trust and reliability can iron out these loopholes and work to the benefit of all. So, let us focus on the good aspects of PCD monopoly by a pharma company and put the others on the side.
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