Wastage in Channel at Retail Level

WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL
SUPERIOR GROUP OF COLLEGES

A Project Of South Asian Educational Promotion Network
MARKETING CHANNEL
The Leaders
MBA Professional (Evening)
Section X
Session 2007-09
Submitted To:
Mr Nouman Bhatti
Group Profile
MARKETING CHANNEL 1
Group Name The Leaders
Group Logo
Group Slogan DARE TO LEAD
NAME ROLL NUMBER
KHALID AZEEM 8257
BILAL RASHEED 8231
AHMAD KHAN 8259
FARHAN BUTT 8227
AHMAD IKRAM 8278
MARKETING CHANNEL 2
DEDICATION
We are dedicating our work to our parents and

respected teacher PROF. NOUMAN BHATTI, who
have played a vital role in our studies and have
guided us at every step with their precious ideas.
No doubt this dedication is insufficient and we can
never repay for the role they have played in our
studies but we are sure that his work will prove
itself an asset in our life.
MARKETING CHANNEL 3
The wastage in WHOLESALER & DISTRIBUTOR level with respect

to pharmaceutical is measured with following factors.
 General introduction
 Management at DISTRIBUTOR & RETAIL level
 Purchase decisions
 Non-Availability
 Reorder Method
 Expiry issues
 Breakage of medicines
 Return and replacement issues
 Inspection
 Legal obligations
We have adopted following methodology to interpret the

survey and determine the results.
o Questioner development
o Data collection from retailers
o Quantitative evaluation by Spss.
MARKETING CHANNEL 4
o Result interpretation
o Suggestions and recommendations
Introduction Pharmaceutical industry is one of the major

industry in Pakistan .The purpose of pharmaceutical is to produce
medicines, to cure sickness. Like other industries pharmaceutical
is also providing medicine to their consumers through proper
channel. The purpose of this assignment is to indicate the type
and quantity of wastage at wholesaler & Distributor level.
Wholesaler level is second last channel member of marketing
channel. So pharmaceutical industry can have more market share
by controlling wastage at retail level.
Data collection on wastage
We have prepared questionnaire consist on 35 questions. The

questionnaire includes two Qualitative and quantitative.
The questionnaire that we have prepared is following.
We have gathered the data from following WHOLESALERS.
wholesaler Address
Name
Amir Medicine Lohari Gate Lahore
Shamsi Pharmacy Muslim Masjid Lahori Lahore
Amin Traders Out side lohari gate Lahore.
Faisal Enterprises Anarkali lohari gate Lahore
Khan Medicine Lohari Markeet Lahore.
MARKETING CHANNEL
New Quality Medicos Out side lohari gate Lahore. 5
Distributor name
PREMIER AGENCIES
VERTEX PHARMACEUTICALS
DYNALOG SERVICIES COMPANY
How long you are running this store? 1- 2 years 2- 5 years 5- above
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
PREMIER AGENCIES (DISTRIBUTER)
X
( DISTRIBUTOR) X
( DISTRIBUTOR) X
ANALYSIS
About 78% wholesaler are operating more then five years .We have
analyzed that most of the wholesalers we have concerned are doing business for
more than five years which show the maturity and expertise of the wholesalers.
So their experience will also be helpful for us to identify the wastage on
wholesaler level.
MARKETING CHANNEL 6
The distributors that we have taken are working more than five years
How many Medicines do you have? 100-200 200-500 500- above
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X
VERTEX PHARMACEUTICALS ( DISTRIBUTOR)
X
DYNALOG SERVICIES COMPANY ( DISTRIBUTOR)
X
ANALYSIS
56% having the medicines in the range of 100-200. While 22% having medicines
in the range of 200-500.
The most of wholesalers have medicines in the range of hundred to two hundred
this is because they try to stock those items which are not available there
competing wholesalers nearby,
Distributors work out with different companies so they have wide range of
medicines.
MARKETING CHANNEL 7
Do you purchase medicines from

distributors? YES
NO
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
ANALYSIS
Most of wholesalers directly purchase medicines from distributors while there are
some who purchase from open market.
All the distributors are directly linked with company, they get the medicines from
the factory and then contact the wholesalers to sale them.
MARKETING CHANNEL 8
How much staff do you have?

1-5
5-ABOVE
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X
X
X
ANALYSIS
Almost all the wholesalers have five individuals in staff.
Distributors have the staff of approx. twenty to thirty representatives.
Do you hire untrained persons? YES
MARKETING CHANNEL 9
NO
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
New Quality Medicos

X
X
( DISTRIBUTOR) X
( DISTRIBUTOR) X
ANALYSIS
58% wholesalers hire untrained individuals.

Almost all the wholesalers hire untrained persons and they gradually train them
while The Distributors mostly hire qualified and experienced individuals to
perform the jobs.
COMPUTERIZE
What type of system you are using? D MANNUAL
MARKETING CHANNEL 10
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X
X
( DISTRIBUTOR) X
ANALYSIS
Some wholesalers are using computerized system and some are not in other words
the ratio is 1:1. It means that if 10 are using computerized system then 10 are using
manual system. Those who are not using computerized system, intend to avail this
facility in future. They also gave positive response to our suggestions to use a
computerized system.
All most all the distributors are using computerized system because they are
attached to national and multinational companies so the do have to be updated in
the sense of technology. It was also found that the distributors have provided their
senior staff members with digital handheld computers.
Are you in The favor of Automated System? NO YES
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
ANALYSIS
All the wholesalers are in the favor of automated system because it is time saving,
efficient and effective for maintaining day to day transactions and ordering. They
are also agreed to develop and automated business system.
How Much you have invested in Automated 20000- 50000-

10000-
System. 50000 ABOVE
20000
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
Khan Medicine
New Quality Medicos

X
X
X
X
ANALYSIS
The wholesalers have their software for record keeping. The two of first have
invested 10000-20000 for it. While the distributor have invested 10.0000 above on
software.
According to above mentioned freq. table the wholesalers invested ten thousand to
twenty thousand for automated system.
And the distributors usually spend fifty thousand above to attain and install
automated system.
How many distributors are supplying you? 1-5 5-ABOVE
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
ANALYSIS
Wholesalers mostly have more than five distributors who provide them required
(ordered) medicines.
Do you think distributors are involved in NO NORMAL SOMETIMES

corruption?
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
QUALITATIVE ANALYSIS
Thirty percent wholesalers claim that distributor is involved in corruption and

remaining comment that distributor is not in to corruption. And the reason is those
distributors have a proper network and supply chain, therefore the minimum
corruption takes place.
Distributors did not agree that they are involved in corruption because of a proper
check and balance system.
Do you face theft issue by your workers? NORMA MEDIUM

L
NO
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X
X
( DISTRIBUTOR) X
56% of consulted parties don’t hire untrained persons, while other hires. As it is
stated before that corruption is rare in both channels so it affects the sale less.
NO
Do you face theft issue by your Customers? NORMAL MEDIUM
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X
X
X
ANALYSIS
Wholesalers and distributors both face very less theft by customers. It also results
that theft issues by workers are faced by retail level.
Do you face shortage of medicine? NO sometime some cause

s
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
New Quality Medicos

X
X
( DISTRIBUTOR) X
ANALYSIS
Wholesalers and distributors both face shortage of medicine. During survey we

came to know that companies their self sometimes create an artificial storage and
hook the wholesalers
The following medicine highly faced by shortage
Tab Dexamathasone (Local)

Tab Batnilon (Multinational)
Tab Feno barbiton (Local)
Tab Hyosine (Local)
Tab penorit (mul;tinational)
Inj pencilline (multinational)
Inj Kanamycine (multinational)
Which category of medicine is highly High/lo Legal Branded

faced by shortage? w Cost Action issue
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X
X
( DISTRIBUTOR) X
ANALYSIS
About 80% claimed that they faced shortage.

Usually the shortage of branded medicines occur in the market. Both wholesalers
and distributors claim to be effected by this.
How do You Decide Re-ordering? Computerize

Manual Other
d
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X
( DISTRIBUTOR) X
( DISTRIBUTOR) X
ANALYSIS
Wholesalers usually reorder manually instead distributors have maintained

management information system to reorder the medicines. When gave suggestions
to the wholesalers about a computerized system most of them agreed to adopt the
system.
Do you Sale on Credit Basis?

Yes NO
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X
X
( DISTRIBUTOR) X
A lot of Wholesalers do sell on credit bases as analyzed, but some of distributors

do credit business and some do not.
The Price Range For Credit Basis Are? 10000- 20000- 35000-
20000 35000 Above
Amir Medicine
X
Shamsi Pharmacy
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X
X
( DISTRIBUTOR)
ANALYSIS
Wholesalers do credit basis more than distributors in other words wholesaler has
more investment as compared to distributor. And distributor give credit but at less
ratios and recover it soon.
Do you face Breakage Problem Of

NO Normal Medium
Medicine Packaging?
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X
( DISTRIBUTOR) X
( DISTRIBUTOR) X
ANALYSIS
Both channel members have almost normal breakage problem. Because the supply
is in bulk so there is less chance of breakage, when it is in small units then there
are more chances of breakage e.g. At retail level.
What is monthly breakage cost? 5000- 10000- 15000-

10000 15000 Above
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
Khan Medicine
X
New Quality Medicos

X
X
X
( DISTRIBUTOR)
ANALYSIS
45% having brackage in the range of 5000-10000,while 27.5% having in the range
of 10000-15000 and above.
Wholesalers remarks are that when medicines move from company to retailer their
breakage ratio increases it means that distributor have low breakage as compared
to wholesaler and retailer.
Do you have replacement on breakage?

NO Normal Medium
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X

X
X
( DISTRIBUTOR) X
Most of wholesalers claim that the have no efficient breakage facility on the other
hand distributors sated that they mostly sort out breakage.
Do you share replacement with your

NO Normal Medium
customer?
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X

X
( DISTRIBUTOR) X
We have analyzed that the wholesalers only share the replacement of those
medicines that the distributor gives them. And they do not share the breakage, in
case of non availability of this facility
Do your distributor sort out brakeage

NO Normal Sometimes
problem efficiently.
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X

X
( DISTRIBUTOR) X
Distributor stated that they always replace the breakage but the behavior of whole
salers is entirely opposite that breakage is not replaced.
Do you have expiry problem. NO Normal Sometimes
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X

X
( DISTRIBUTOR) X
ANALYSIS
The wholesalers claim that multinational companies don’t replace expired

medicine. They have much problem in multinational medicines in case of expiry.
But when we talk about national companies, they do replacement of expired
medicines with wholesalers as well as distributors,
Wholesalers also claim that most of the distributors don’t want to replace expired
medicines.
The distributors of pharmaceutical say that they always replace the expired
medicines but the wholesaler have to inform them three months before the expiry
date.
The Monthly Expiry Cost you faced? 5000- 10000-

Zero
10000 50000
Amir Medicine
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X

X
( DISTRIBUTOR) X
ANALYSIS
Wholesalers have the stock of expired medicine of multinational companies some

wholesaler claims that they have the stock of expired medicine costing 2 laces.
They are waiting for the response of the company that these might be replaced in
future.
Some wholesalers also put this matter in court the supreme court has ordered
multinational companies to payback or replace the expired medicines but this order
was be executed due to selfishness of the companies.
Which Type of medicine is Highly Capsule

Injections Tablets
Expired? s
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
Khan Medicine
New Quality Medicos

X

X
( DISTRIBUTOR) X
The survey from Wholesalers proves that almost all the medicines have same
expiry problem.
Does Drug Inspectors Monthly Visit

Your Store?
NO Yes Sometimes
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X
X
( DISTRIBUTOR) X
In the past the drug inspectors visit the wholesaler for their own interests, personal
benefits, the system is gradually changing now the current situation is that the chief
minister of Punjab has ordered drug inspectors and other medical teams to visit the
wholesalers and distributors regularly. We also come to know that the team formed
by chief minister visits thrice a week.
Do You face Bribery Causes W.R.T Drug

NO Yes Sometimes
Inspector?
Amir Medicine
X
Shamsi Pharmacy
X
Amin Traders
X
Faisal Enterprises
X
Khan Medicine
X
New Quality Medicos
X
X
X

( DISTRIBUTOR) X
Wholesalers and distributors say that they do follow all the rules and regulations
related to Drug Act so they don’t have to pay any bribe to any inspector.
The wholesalers conclude that the trend of taking samples have also changed, in
the past medical teems used to take so much medicine for sample testing purpose
but now a day every medicine which is taken for testing purpose is recorded on a
legal authentic document.
How Much you have to pay illegally. 10000- 20000-

Zero
20000 30000
Amir Medicine
0
Shamsi Pharmacy
0
Amin Traders
Faisal Enterprises
0
Khan Medicine
0
New Quality Medicos
0
0
0
( DISTRIBUTOR) 0
In the past wholesalers had to pay illegally to medical teams but the environment
has changed. Now a days they mostly don’t pay a single penny to any team.
Summary
o Through this research we have analyze that most of the
wholesaler does not purchase medicines from open
market ,so pharmaceutical industry should develop a
strategy and proper channel to cash the wholesaler.
o The wholesaler also have complain of corruption about

suppliers, so their should be a monitoring system.
o The maximum wholesaler is using manual system to re-order

the medicines. So there is a need to create awareness about
the fruitfulness of the IT technology. The distributor level is
updated.
o The wholesalers mostly sale on credit bases but distributors

try their best to deal in cash.
o The maximum wholesalers have brakeage problem of

medicines while distributor don’t face this problem.
o The government should take action against multinational

companies and audit them to sort out their problem.
o In the past wholesalers had to pay illegally to medical teams

but the environment has changed. Now a day they mostly
don’t pay a single rupee to any team.
o In brakeage problem the replacement is available but in

expiry issue most of distributors are disable.
o The multinational medicines are mostly non available in

market.
o Most of retailers have misperception about IT technology in

the sense of VOLATILITY,EXTRA EXPENSE, Etc

Wastage in Channel at Retail Level

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WASTAGE IN CHANNEL AT WHOLESALER & DISTRIBUTOR LEVEL

SUPERIOR GROUP OF COLLEGES

Group Name The Leaders

Group Slogan DARE TO LEAD

NAME ROLL NUMBER

KHALID AZEEM 8257

BILAL RASHEED 8231

AHMAD KHAN 8259

FARHAN BUTT 8227

AHMAD IKRAM 8278

We are dedicating our work to our parents and

The wastage in WHOLESALER & DISTRIBUTOR level with respect

 Management at DISTRIBUTOR & RETAIL level

 Return and replacement issues

We have adopted following methodology to interpret the

o Data collection from retailers

o Quantitative evaluation by Spss.

o Suggestions and recommendations

Introduction Pharmaceutical industry is one of the major

Data collection on wastage

We have prepared questionnaire consist on 35 questions. The

The questionnaire that we have prepared is following.

We have gathered the data from following WHOLESALERS.

Shamsi Pharmacy Muslim Masjid Lahori Lahore

Amin Traders Out side lohari gate Lahore.

Faisal Enterprises Anarkali lohari gate Lahore

Khan Medicine Lohari Markeet Lahore.

DYNALOG SERVICIES COMPANY

Do you purchase medicines from

How much staff do you have?

Almost all the wholesalers have five individuals in staff.

Distributors have the staff of approx. twenty to thirty representatives.

Do you hire untrained persons? YES

New Quality Medicos

58% wholesalers hire untrained individuals.

Are you in The favor of Automated System? NO YES

How Much you have invested in Automated 20000- 50000-

New Quality Medicos

How many distributors are supplying you? 1-5 5-ABOVE

Do you think distributors are involved in NO NORMAL SOMETIMES

Thirty percent wholesalers claim that distributor is involved in corruption and

Do you face theft issue by your workers? NORMA MEDIUM

Do you face shortage of medicine? NO sometime some cause

New Quality Medicos

PREMIER AGENCIES (DISTRIBUTER)

Wholesalers and distributors both face shortage of medicine. During survey we

Tab Dexamathasone (Local)

Which category of medicine is highly High/lo Legal Branded

About 80% claimed that they faced shortage.

How do You Decide Re-ordering? Computerize

Wholesalers usually reorder manually instead distributors have maintained

Do you Sale on Credit Basis?

A lot of Wholesalers do sell on credit bases as analyzed, but some of distributors

Do you face Breakage Problem Of

What is monthly breakage cost? 5000- 10000- 15000-

New Quality Medicos

Do you have replacement on breakage?

PREMIER AGENCIES (DISTRIBUTER)

Do you share replacement with your

VERTEX PHARMACEUTICALS ( DISTRIBUTOR)

Do your distributor sort out brakeage

VERTEX PHARMACEUTICALS ( DISTRIBUTOR)

Do you have expiry problem. NO Normal Sometimes