Pharmacies bleeding; Harcourts asks CAA to grant higher retailer margin
Friday, 18 July 2014 00:14
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As many pharmacies are in difficulty due to high cost overruns, the Consumer Affairs Authority (CAA) has been urged to grant a higher retailer margin.
“The retailer margin offered to the pharmacy retailers in Sri Lanka is the lowest in the world,” a leading pharmacy chain Harcourts has written to the CAA.
The average margin given in Sri Lanka ranges from 10 to 12% for high-tech products and 15% for generic and branded products. Harcourts has recommended a minimum margin of 25% for the retail trade.
CAA has been informed that globally retailers’ margin offered in other countries by the pharma trade is higher. Examples cited include 20-22% in India, 23% in Pakistan, 20% in China, 30% in Europe and 35% in the US.
“The margin currently provided by the importer is very low compared to the cost of operation. The cost of operation has gone up five fold in the last 10 years,” Harcourts Managing Director Ivor Fernando has said in written submissions to the CAA.
He has claimed that most pharmacies in Sri Lanka are closing down as they are unable to maintain the high cost of operation involving electricity, air conditioning, rental and cost of pharmacist as well as the high cost of maintaining skilled staff.
With air conditioning, even a small pharmacy has to pay an electricity bill of over Rs. 60,000 a month, Harcourts has said in requesting for a minimum 25% margin for the retail trade when CAA finalises the pricing formula for pharmaceuticals.
