After intensive care, people’s pharmacy Jan Aushadhi sees healthy sales spike

Branded generics are not typically found in Jan Aushadhi kendras—pharmacies registered under a central government scheme to promote affordable medicines. Mumbai Jan Aushadhi is able to sell them because, despite its misleading name, it is not part of the scheme. The canny owner has been riding on the government scheme’s name to draw customers, without giving too much mindspace to little irritants such as copyright law.

“We wanted to start a Jan Aushadhi kendra because they are doing so well,” the proprietor toldMint, requesting anonymity. “But we couldn’t because there is already one registered 800 metres away.” Under the scheme’s guidelines, no two Jan Aushadhi centres can exist within a 1 km radius.

In September, Jan Aushadhi sales reached a monthly record high of ₹200 crore, surging 42% over the same month last year, according to the ministry of chemicals and fertilizers, under whose purview the scheme falls. Overall sales for 2024 reached ₹ ₹1,000 crore in October, outpacing the previous calendar year, when they had crossed the ₹1,000 crore mark only in December. Jan Aushadhi kendras across the country see about 1 million footfalls daily, according to a government release dated 21 October.

The goal of the scheme, which was started by the Congress-led United Progressive Alliance (UPA) government in 2008 and rebranded by the BJP-led National Democratic Alliance (NDA) government in 2015, was to sell crucial drugs and medical supplies at affordable prices. But quality and supply issues, as well as low profitability, have hindered its growth all these years.

Despite these challenges, pharmacists are rushing to open Jan Aushadhi kendras, or pharmacies that resemble Jan Aushadhi kendras. The number of Jan Aushadhi kendras has grown from 80 in 2014 to over 14,000 today, according to the 21 October government releasecited above. The target is to have 25,000 by FY27.

“People know what Jan Aushadhis are, and they know this is where they will get affordable drugs…the brand works,” the pharmacy owner cited above told Mint. Mumbai Jan Aushadhi gets a lot of customers because of the scheme’s name. The pharmacy sells branded medicines at prices that closely rival those sold at registered Jan Aushadhi kendras, with discounts of up to 70%, thus retaining clients.

To be sure, the biggest appeal of a Jan Aushadhi kendra is that it sells unbranded generics that are anywhere between 50%-90% cheaper than their branded counterparts, putting them within the reach of a majority of lower-income patients.

According to a government press release dated 3 October, medicines worth ₹6,100 crore have been sold through Jan Aushadhi kendras in the last 10 years, leading to an estimated ₹30,000 crore being saved for consumers.

A lot of those savings have come in recent years. In the last fiscal year (FY24) alone, the scheme saved people ₹7,350 crore in medical expenses, up from just ₹44 crore nearly ten years ago, according to an estimate by the department of pharmaceuticals, in its latest annual report.

Profitability challenge

Under the rules framed for the scheme, anyone can apply to set up a Jan Aushadhi kendra, provided they have B. pharma or D. pharma licence or employ someone who does. Once set up, the kendras can procure supplies from both government and private manufacturers. There is a 20% margin on the maximum retail price (MRP) of each drug sold under the scheme.

Additionally, pharmacists get an incentive of 15% on monthly purchases made from Pharmaceuticals & Medical Devices Bureau of India (PMBI), the implementing agency for the Jan Aushadhi scheme, up to a ceiling of ₹15,000 per month.

The scheme, by design, is meant to be a low-value, high-volume play to make drugs affordable, especially for low-income groups. The challenge for kendra owners and suppliers is to generate those volumes to make a decent profit. For instance, at a 20% margin, a Jan Aushadhi earns a profit of ₹4.4 on a strip of pantoprazole priced at ₹22. The pharmacy would therefore need to sell 1,136 strips to earn a profit of ₹5,000.

The scheme, by design, is meant to be a low-value, high-volume play to make drugs affordable, especially for low-income group.

Most private pharmacists, too, have a margin of 19-20% on the drugs they sell. But they make a much bigger profit on each sale because of the vast difference in price. For instance, a private pharmacy earns ₹35 selling just one strip of Alkem’s generic pantoprazole brand Pan-40, which has an MRP of ₹170. So, unlike the Jan Aushadhi, it needs to sell only 150 strips to make a profit of over ₹5,000. (Note: Some pharmacists offer a discount on the MRP, but still earn a handsome profit.)

For some, profitability isn’t an issue. 65-year-old Vijay Gosar set up a Jan Aushadhi kendra in Mumbai in 2016. He has since opened five more stores across the city, along with two branded generics pharmacies. Gosar has 30,000 patients registered with his first store buying medicines regularly for chronic illnesses. Across his six stores, he has about 100,000 patients. Asked whether this is enough for him to run a profitable business, he said, “More than enough. I have a staff of 50 spread across all my stores—that’s what I can tell you.”

But there is more to Gosar’s story—his profitability does not rest on Jan Aushadhi alone. He also has a branded store next door. “The branded basket has 80,000 products [Jan Aushadhi has about 2,000],” he said. “Our goal is to ensure that patients do not return empty-handed…so if someone comes to my Jan Aushadhi store and asks for a medicine that is not available, I will send them next door; and if they come to my branded store and ask for cheaper drugs, I will send them to the other side,” he explained.

Many Jan Aushadhi owners sell branded generic drugs through their registered pharmacy, often without the buyer’s knowledge. A pharmacist who was employed at a Jan Aushadhi until last year told Mint that this was partly to beef up profit margins, and partly because of supply issues. “For instance, if they ordered a stock of 50,000 units of a drug, they would only get 30,000,” he explained.

Mint visited four Jan Aushadhis across Mumbai independently and asked for pantoprazole tablets for acidity. Three of the four gave us branded generic versions of the drug first, and only offered the unbranded Jan Aushadhi version when asked. (Jan Aushadhi medicines are packaged in a signature white and blue package, with a stamp and logo indicating they are part of the scheme).

Notably, the branded medicines were not much more expensive than the Jan Aushadhi drugs. In one case, a branded version of Pantoprazole, Pantaric-40, was being sold at ₹20, at a whopping 80% discount to the product’s ₹102 maximum retail price. The Jan Aushadhi version was being sold at ₹12.

“Consumers are often unaware of the difference between a branded generic and an unbranded generic sold under Jan Aushadhi,” said one of the pharmacists Mint visited. “They want to buy whatever is cheapest.”

Mint reached out to PMBI chief executive officer Ravi Dadhich for comment but has not received a response.

On a war footing

With annual sales of just ₹1,470 crore as of FY24, the Jan Aushadhi system is still a tiny drop in India’s domestic pharmaceutical market. The high volumes that the scheme is supposed to generate haven’t happened yet.

That perhaps is the reason the scheme isn’t seen affecting the prospects of branded drugs immediately. According to a December 2023 report by Kotak Securities, lower prices in the trade generics and Jan Aushadhi channels are expected to dent the annual growth of branded drugs only by 70-110 bps until FY28.

But the increase in sales momentum may see that change over the long term. Distributors on the ground told Mint that sales have surged this year largely because of a concerted awareness campaign by PMBI.

Prem Thacholi, a distributor in Ernakulam, Kerala, is expecting to end this fiscal year with a 50% year-on-year increase in his turnover, well up from 5-10% in the previous three years. Thacholi supplies Jan Aushadhis across Kerala, and has been in the business for about 10 years.

Thacholi’s sales have shot up this year largely thanks to the addition of 400 new kendras in Kerala over the last year, as well as addition of new products to the Jan Aushadhi scheme. Another key driver has been awareness camps conducted by the distributor, on directives from the PMBI and the department of pharmaceuticals (DoP).

“We conduct these camps in tribal and rural areas and underpenetrated colonies once in two months, where we build awareness about Jan Aushadhi,” said Thacholi.

Another reason for the rise in footfalls is a key product that the scheme added to the basket in 2019: sanitary napkins. Each napkin is sold at ₹1, a point that distributors and pharmacists, as well as government communication, emphasize. This has increased the number of women and young girls, especially from low-income groups, who frequent Jan Aushadhis. “We have been distributing the napkins in schools, colleges, and hostels as well,” Thacholi said, explaining the pickup this year. Sales of sanitary napkins in Kerala have shot up 300% this year, he said.

Sales of sanitary napkins in Kerala have shot up 300% this year.
-Prem Thacholi

“The department has been on a war footing since the last two years,” a Delhi-based distributor, who requested anonymity, told Mint. He is expecting sales to grow 35-40% this financial year.

There are currently 36 distributors associated with Jan Aushadhi that supply kendras across the country. Unlike with pharmacies, there is no restriction on where a distributor can supply—they can go pan-India. There is also no cap on new entrants.

Quality issues

Two major issues have plagued the Jan Aushadhi scheme since inception: questions about quality, and supply delays. While the main warehouse is in Gurugram, the government has opened stock points in Bengaluru, Chennai, and other locations to address the supply challenge. This has largely addressed the problem, Thacholi said.

Two major issues have plagued the Jan Aushadhi scheme since inception: questions about quality, and supply delays.

But the quality of drugs sold by Jan Aushadhis remains a concern. While there is limited research on this, most doctors are reticent about prescribing unbranded generics. “They are not harmful, but they tend to be less potent. For patients with chronic conditions like diabetes or hypertension, this can be dangerous,” said a Mumbai-based doctor.

Another concern is the anonymity of the manufacturers. A Mumbai-based patient, who was using nebivolol tablets from a Jan Aushadhi for several months in 2023 to treat hypertension, stopped when he started experiencing headaches. “They may have changed the manufacturer. We don’t really know who the manufacturer is in this case,” he told Mint, requesting anonymity.

In an effort to build trust, the department of pharmaceuticals has been working with drugmakers to ensure quality compliance. Only manufacturing plants that are WHO-GMP certified—that comply with the World Health Organization’s good manufacturing practices—are eligible for tenders.

Several Jan Aushadhi suppliers, such as ANG Lifesciences and Ridley Life Science, were blacklisted this month for supplying substandard drugs. In the last tendering round for the scheme, held in 2021-22 for supplies up to 2024, these vendors won orders worth tens of crores for antibiotic drugs such as roxithromycin.

Another major supplier, Zee Laboratories Ltd, has been blacklisted by several state medical services, including Chhattisgarh, Odisha and Tamil Nadu. In fact, Zee Laboratories was barred by the Jan Aushadhi system last year until 2025 for supplying substandard drugs, including some that are widely used, such as Paracetamol. Other large suppliers in the list include Unimarck Healthcare and Mascot Health Series Pvt. Ltd.

In an effort to build trust, the department of pharmaceuticals has been working with drugmakers to ensure quality compliance.

At the same time, many larger contract pharma manufacturers have become significant suppliers to the Jan Aushadhi system. Among them is Macleod’s Pharmaceuticals, which filed papers for an initial public offering in 2022 (but deferred the issue). Another is Mumbai-based Inventia Healthcare.

Theon Pharmaceuticals, a third-party pharmaceutical manufacturing company, has been supplying PMBI for the last ten years, managing director Amit Bansal told Mint. Sales to Jan Aushadhi comprise 30% of the company’s government tendering business, he added. “We would like to dedicate increased capacities to Jan Aushadhi, because the payments are on time,” said Bansal.

The profit margin, however, is a challenge. “We can’t have huge margins…just that our basic costs on operations get covered,” Bansal said. “We also have to be competitive, because there are other quality manufacturers in the market,” he added.

Other key suppliers include Delhi-based Synokem Pharma, which sold a significant stake to American PE firm TA Associates last year for ₹1,000 crore.

Who benefits?

While the consumer demographic is a mix, pharmacists see an increasing number of senior citizens and people from low-income groups availing drugs from Jan Aushadhi kendras for chronic therapies. A rickshaw driver aged less than 30, who suffers from blood cancer, has been a regular patient at Gosar’s shop this year. “His monthly medicine bill used to be around ₹7,000, and now it is around ₹1,200,” said the pharmacist.

Apart from the low prices of drugs sold at Jan Aushadhis, rising competition and aggressive discounts by online pharmacies have led brick-and-mortar pharmacies to lower their prices. A quick survey of the branded generic pharmacies in the periphery of Gosar’s shop showed that most offer a flat discount of 17-20% on the products they sell. The lower prices have, however, forced the pharmacies to cut costs in order to improve their margins.

“My competition is the three pharmacies that have recently opened up next to mine, more than anything else,” said a Mumbai-based pharmacist who owns two shops. “Some of them are offering massive discounts trying to get an edge, and we are all forced to match that,” he added. At the end of the day, it is those who can focus on finetuning their operational efficiency, who will survive, he added.

One thing, however, is clear: affordable medicines are here to stay. And consumers won’t mind that.