Govt plans higher margins, longer credit to make Jan Aushadhi Kendras attractive

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New Delhi: The government is working on a plan to make business operations at Jan Aushadhi Kendras self-sustaining and attractive for the retailers to maintain a full inventory of medicines and consumables.

As part of the plan, the government aims to boost product margins gradually to up to 50% for retailers operating these pharmacies, set up under the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) to sell affordable, high-quality generic drugs, according to two government official and a document reviewed by Mint.

To support the retailers, steps are being considered to alter the baseline retail incentive structure, increase product margins, and absorb the losses of expired inventory. Also, instead of a 45-day credit period, these shops can be given 75-day credit periods to reduce their working capital requirements.

“The Department of Pharmaceuticals is working to raise the financial return for individual shop owners. As Jan Aushadhi medicines are low-priced compared to branded medicines, the same margin to retailers may not cover their costs. The government has already increased retailer margins and intends to increase them further over the coming year to make store operations viable and attractive enough for shopkeepers to maintain a full inventory of medicines,” Manoj Joshi, secretary, Department of Pharmaceuticals, told Mint.

PMBJP is an initiative of the Department of Pharmaceuticals to provide quality generic medicines at affordable prices to the public. The scheme, implemented by the Pharmaceuticals & Medical Devices Bureau of India (PMBI), aims to reduce consumers' out-of-pocket expenditure and popularize generic medicines among the masses.

“PMBI will provide a credit period of 90 days to the distributors for making payments to PMBI for supply. The distributors shall, in turn, provide a credit period of 75 days to the Jan Aushadhi Kendra owners for payments against goods supplied to them,” according to the document reviewed by Mint.

In addition, PMBI will provide an additional 2.5% margin on the invoice value of sanitary pads as compensation towards distributors' logistics costs, the document said. To be sure, Mint could not ascertain the impact on the price of generic drugs due to the proposed rise in product margins to 50%, from 30% currently.

Steps have also been taken to enhance the credit period across the supply chain network of distributors and retailers to ease the pressure on working capital available with the distributors and retailers.

“Independent retailers and distributors face challenges due to rigid payment terms and losses from unsold, expired medications. The government has introduced extended credit periods and agreed to take back expired medicines to lower the financial risks borne by the shops. We are giving them a longer credit period—instead of a 45-day credit plan, now we are giving them a 90-day credit plan, so that their working capital cost is lower and they could keep all the medicines,” Joshi said in an interview.

These affordable generics are sold through approximately 20,000 Jan Aushadhi Kendras across the country, which are franchisee-operated exclusive retail stores.

With a product basket of over 2,110 drugs and 315 medical devices and consumables, the Janaushadhi product range covers major therapeutic groups, including anti-infective, anti-diabetic, anti-allergic, gastro-intestinal medicines, cardiovascular, and anti-cancer drugs.

Over the past 12 years, the Janaushadhi Pariyojana has shown consistent growth in terms of the number of functional stores and sales. The government has set a target to open 25,000 Jan Aushadhi Kendras by March 2027.

Experts said a robust supply system and structured margins are needed to ensure the Jan Aushadhi Kendras remain viable.

Indu Bhushan, former chief executive officer of National Health Authority (NHA), said, “Promoting generic medicines is a vital step toward achieving self-sufficiency under the Atmanirbhar Bharat vision and reducing out-of-pocket healthcare expenses for our people. As the largest producer of generic medicines in the world, India is very well positioned to lead this effort.”

“However, for this initiative to succeed sustainably, we must balance two critical pillars: financial viability and rigorous quality control. We need a robust supply system and structured margins to ensure our Jan Aushadhi centres remain viable. Simultaneously, we must strengthen our pharmacovigilance and surveillance systems to maintain medicine potency from approval through to consumer use. Ensuring this continuous standard of quality is essential to building deep consumer confidence and shifting the public perception surrounding generic drugs,” Bhushan, who is a visiting faculty at the Johns Hopkins University, said.

All Jan Aushadhi medicines are procured from World Health Organization–Good Manufacturing Practices (WHO-GMP) certified drug manufacturers to ensure compliance with the quality standards. In addition, the medicines undergo 100% batch testing at National Accreditation Board for Testing and Calibration Laboratories-accredited labs as part of the quality check measures adopted under this program.

“The products display a remarkable adherence to prescribed standards with 99.85% of the batches clearing quality checks at these labs. The government is also taking steps to modernize the backend logistics and demand forecast methods to eliminate procurement delays which occasionally cause stockouts at the retail level. The government believes that these measures will address the challenges faced by the retailers and help in expanding the scheme across the country in the coming years,” a Department of Pharmaceuticals official said, requesting not to be named.

“For top 400 fast-moving products, the existing 2% upfront discount provided as expiry compensation will continue to be extended to JAKs/Distributors as per the current practice for top 400 fast moving products,” the document showed. “The current scheme of providing 25% additional units with 100% discount for medicine having a remaining shelf life of four to six months will continue unchanged.”

“Products categorized above top 400, these products will be supplied on a returnable stock basis, allowing the return of expired products to the purchase source, thereby reducing inventory risk,” the document showed.

Priyanka Sharma is a journalist at Mint, where she covers the Union Ministry of Health and the pharmaceutical industry. Her work focuses on explaining government policies and how they impact healthcare and the medicine market in India. With 12 years of experience in journalism, she has built a reputation for providing clear and honest news on important health topics that affect the entire country.<br><br>Her educational background includes a journalism degree from the prestigious Indian Institute of Mass Communication (IIMC) and specialized training in public health from the Public Health Foundation of India. Before her current role at Mint, Priyanka worked with India Today, The Pioneer, and ANI. She also served as a lead consultant for the National Health Authority, which gave her firsthand knowledge of how the government manages large-scale health programmes.<br><br>Priyanka is based in New Delhi and is an avid traveller who loves visiting the mountains. She has a great interest in regional flavours, particularly South Indian food.

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