Third Party Manufacturing

What is the percentage offered to Marketing and distribution firms?

Query:
We are a pharma manufacturing company and are considering giving out marketing and distribution rights to third parties but are confused as to what the industry standard rates are and on what it is calculated.
1.What is the percentage offered to Marketing and distribution firms?
2.On what is this calculated? Rate to stockist or MRP?
3.For example if a product has MRP of Rs 100 before tax of 5%.
What would be a good rate to offer to Marketing and distribution firm?
Please let me know.

Response:


As number of pcd companies is increasing, competition in providing marketing and distribution rights is also increasing. Along with product range, you should have competitive price to get better franchise/pcd partners who will market you products in their area.

At present, Pharma companies provide products at Net Price basis to their Marketing and Distribution Partners. Net Price is calculated at basis of its manufacturing cost, not at MRP or PTS. Every company has its own formula for calculating its net rate after fixing its profit margin.

Your marketing expensive will be nil, once you have get a marketing and distribution firm. So, you need not to add any marketing and sales expenses while calculating Net Price. Simply add your percentage of margin at product’s manufacturing cost. and fix its rate.

For example, Ofloxacin 200 mg tablet has approximately -/- rs tablet MRP allowable under DPCO and Its manufacturing cost is nearly -/- rs per tablet. Now you have to calculate its price to marketing and distribution firms. You will not calculate it by considering -/- as standard. You have to assume 0-/- as standard and calculate net price at the basis of it. Currently Ofloxacin net rate is -/- per tablet. Nearly 30% margin according to its manufacturing cost.

Other than this net price also depend at market competition, Few products give more margin and few will give less. You will not need to offer percentage to marketing and distribution firms, fix your price at which you will sell after fixing your margin. Marketing and Distribution firms itself calculate own percentage.
Read our article to calculate: How to calculate profit margin, net rate, mrp in Pcd franchise marketing?

Query:

We have been trying to identify good PCD companies in India especially in Tamilnadu ,Karnataka ,Andhra Pradesh and Kerala.But have been only receiving offers for franchise.Can you please help me identify probable PCD companies who would undertake marketing and distribution of pharmaceutical products in these states.

Response:

Read below article to know how to market at pcd basis:

Powerful tools for establishing Pcd/franchise network.

How to find pcd/franchise distributors?

How to get pcd/franchise queries for your allopathic ayurvedic company?


Hope above information was useful to you…
For any query and suggestion, mail us at pharmafranchiseehelp@gmail.com

About Author

Full Time Blogger, Part Time Entrepreneur and Partial Time Helper for New Start-UP's in Pharmaceutical, Ayurvedic and Nutraceutical Sector. Contact him at pharmafranchiseehelp@gmail.com

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