Way to calculate cost and profit for pcd pharma companies in India.

Whenever one enters into a pcd pharma business, one of the major criteria to success or failure is to manage one’s finance well.

Anyone entering into the business of pcd pharma is usually an ex pharma professional or a distributor. Both of these have limited finance and thus manage this limited finance can result in a successful business.

So how does one calculate their per-product or per item cost and profit in a pcd pharma business ?

Retailer: PCD pharma companies usually offer 20 percent margin to the retailer on MRP. So thus if the MRP of a box is Rs 1000 then a retailer is billed at Rs 800.00 and he sells it the customer at Rs 1000.

Pcd pharma companies in India also offer a 10 plus 1 or a 10 plus 2 schemes to these retailers to prevent them from substituting their product with a standard company product or a generic company product.

Thus if the same product costs Rs 200 per box then 2 strips free would add Rs 40 to the expense.

Doctors: Doctors are promised 20 to 30 percent of Price to Retailer (PTR) for the products that they prescribe. So that gives away Rs 160 to Rs 240 to doctors.  Worst case scenario we are still left with 800-240-40= Rs 520.

So 520 could be the realization for the distributor who has his own license while working for a pcd pharma company.

Stockiest: If the distributor has appointed a stockiest to do his billing then 10 percent of PTR has to be given to the stockiest. Thus in the above example Rs 80 would go to the stockiest.

Final realization is Rs 520-80= Rs 440.00

This return is more than double the investment. After this only miscellaneous expenses have to be accounted for like transport charges and tax. Maximum Rs 30-40 can be allotted for all these.

Thus in this example Rs 400 is realization from a Rs 200 product.

We can use the same calculation to understand how much profit we are earning from each item we sell while doing business from pcd pharma companies in India.

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