10% Margin Hike, More Credit Support: Govt Sweetens Terms For Generic Medicine Shops

In a significant boost to the government’s flagship affordable medicines scheme, the Pharmaceuticals & Medical Devices Bureau of India (PMBI) has increased the trade margin for Jan Aushadhi Kendras from 20 per cent to 30 per cent—a move aimed at improving the viability of stores operating under the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) and strengthening the distribution network for low-cost generic medicines across the country.

The revised margin is part of a broader package of measures announced by PMBI to improve sales of Jan Aushadhi products, ease working capital pressures on distributors and retailers, and address inventory-related concerns within the supply chain.

“The latest package appears aimed at improving the business

viability of Jan Aushadhi Kendras rather than merely expanding their numbers. A government-commissioned evaluation of the scheme’s “continuous viability” found that gains for retailers have not been uniform, with only 43.4 per cent reporting an increase in income since opening their stores,” a senior government official privy to the development told News18.

The study, he said, also flagged operational issues such as medicine availability and supply-related challenges. “Against this backdrop, the decision to raise retailer margins to 30 per cent, extend credit periods and provide additional safeguards against inventory losses could help strengthen the economics of running a Kendra and improve retailer retention across the network.”

By addressing these concerns together, PMBI appears to be shifting its focus from expanding the number of outlets to improving the sustainability of existing ones, the official added.

Credit support, expiry protection and higher incentives

Under the revised framework, PMBI has extended the credit period available to distributors from 60 days to 90 days for payments made to the bureau. In turn, distributors will be required to provide Jan Aushadhi Kendra operators with a 75-day credit period for medicines supplied to them, giving retailers greater financial flexibility.

The bureau, according to the circular issued by PMBI, has also announced an additional 2.5 per cent margin on the invoice value of sanitary pads supplied through the scheme. The incentive has been introduced to compensate distributors for logistics costs and support wider availability of sanitary hygiene products under the Jan Aushadhi network.

To address concerns around inventory losses, PMBI has continued the existing 2 per cent upfront discount provided as expiry compensation for the top 400 fast-moving products sold through the scheme. The current near-expiry medicines scheme for these products will also remain unchanged, allowing Jan Aushadhi Kendras to receive 25 additional units free of cost of medicines with four to six months of remaining shelf life.

For products beyond the top 400 fast-moving medicines, PMBI has introduced a returnable stock mechanism. Under the arrangement, expired products can be returned to the point of purchase, reducing inventory risk for distributors and retailers. However, these products will be supplied exclusively through PMBI-authorised distributors.

What does the move show?

The package of reforms reflects the government’s efforts to make the Jan Aushadhi ecosystem more attractive for entrepreneurs and distributors while improving medicine availability across the country. The PMBJP has emerged as one of the Centre’s flagship healthcare initiatives—highlighted multiple times by PM Narendra Modi during election rallies or his radio show Mann Ki Baat.

According to the report titled “Continuous Viability of Pradhan Mantri Bhartiya Janaushadhi Kendras” submitted by the Entrepreneurship Development Institute of India, Ahmedabad, “Only 43.4% of retailers agreed or strongly agreed that their income had increased since establishing the store, while 34.9% disagreed.” This suggests that the economic benefits of operating a Jan Aushadhi Kendra have not been uniform across all retailers.

The report notes that while the scheme has expanded significantly and enjoys high customer satisfaction, there remains a need to address implementation challenges related to accessibility, business generation, awareness, and continuous viability of Kendras.