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Impact of demonetisation on pharma industry


Amit Mookim, GM, South Asia, QuintilesIMS, explains how digital way will not only benefit the customers but also the overall economy in the long run

Amit Mookim

Over the last few years digital revolution has penetrated across many industries in India and has aided in disruption of business models. Notably amongst the most benefitted industries from digital revolution are e-retailing and financial services. Although slow, the pharmaceutical industry too has been gradually adopting digitisation to offer better patient experience. The recent announcement of demonetisation by the Government of India is an effort towards having a ‘digital India’. The relevance of digitisation have a direct correlation with a progressive economy.

While the bold step taken by the government is highly commendable, we have evaluated the direct effect of this announcement on the pharma industry. We took up a survey across 399 stockist across India post the development and made a qualitative and quantitative analysis. 78 per cent of stockist reflect decreased sales in November 2016 vis-à-vis October 2016 on account of demonetisation with sales getting impacted by 21 per cent in value terms. North Zone is impacted to the maximum followed by South. The pharma companies would have faced severe pressure on primary sales on account of 60 per cent of stockist reflecting no change in stock holding for the month. Demonetisation also has an impact on the therapy areas, with chronic therapies performing marginally better than acute therapies. In addition, online pharmacies have seen an upsurge during the month.


Despite the hit on the overall pharma market, we do see long-term benefits of demonetisation. We will gradually witness a decrease in cash flow, as most transactions will be done through banks and online. There will be documented account of transactions at all steps. This will indirectly cause cheaper medicines followed by appropriate invoicing and billing, a process that is not mandatorily followed in the pharma market. Increasing bank and digital transactions by stockist, wholesalers, distributors and retailers will also help in regulating the industry at higher extent enabling more control of drug department at every purchase and sale. The government will be able to track the sale of banned or illegal drugs and also have the ease of implementing new regulations.


Demonetisation is an effort to ensure that we conduct our business in a fair and transparent manner. We need to look at this development as an opportunity to expand reach, create new innovations, improve market share, and provide additional value to customers by incorporating digitisation into our business models. It is necessary that we all understand as a country that moving towards reduced usage of cash and going the digital way will not only benefit the customers but also the overall economy in the long run. Hence, the effort should be a joint one between the government, the industry and the customers.

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