Implications of Covid-19 on PCD Pharma Franchise Business in India

PCD Pharma Franchise Business in India - With the outbreak of COVID-19, the pharmaceutical sector has greatly affected all over the world. As the sector falls under the Essential Services category, it has seen less impact as compared to other sectors. According to Ind - Ra(India ratings and research), the pharmaceutical industry will see a growth of 3%-5% in size despite COVID 19 outbreak. COVID unlock 3.0 make sure to pull out all the hurdles to ensure smooth production of medicines. There is a monthly revenue improvement from June 2020.

How COVID-19 has impacted PCD Pharma Franchise Business in India?

1. A Sharp Decline in Production and Jobs: As the lockdown period began, there was heavy unavailability of workers because they were afraid of infection. Despite being part of an essential service category, pharma companies were struggling to get the desired number of customers. Labour shortage causes a 50% drop in pharma production. If the situation remains the same, the end result will be a decrease in the production of medical drugs. As a result, Pharma Franchise Companies will have to take some serious steps such as shutting down of production, lay off employees. These steps are necessary to save the operating cost.

2. Delay in Receiving the Consignments: Customers of PCD Pharma Franchise business exists in all over India. Thus, courier and transports play an important part in the supplying of goods in remote regions. Trains are still prohibited from running. Even today, the government has lockdown various states of India, due to which logistic sector was greatly affected. Thus, customers are not able to get the items on time and they are facing a shortage of medicines.

3. Cash Flow Implications: Third-party and contract manufacturers have started working on the 60-day credit facility Due to unavailability of raw materials, uncertainty in prices, they have to take this step. As a result of this, the working capital of PCD Pharma Companies has come down drastically. The demand in these companies is usually a bit irregular. According to us, due to the low level of working capital and an inadequate credit facility, it may be difficult to store more inventory for the future. This may result in a shortage of goods.

4. Effect on Manufacturing Supply Chain: Pharma franchise companies procure products from third party manufacturers. Manufacturers are dealing with unsettled supply chain due to COVID 19 pandemic. We procure Pharma raw material mainly from China. There is a shortage of APIs and this has led to an increase in prices of almost all raw materials. This was a short term COVID 19 scourge. If the number of cases in India continues to increase, then manufacturing facilities will have to be closed again. This will result in an immediate reduction of finished products to PCD companies.

5. A Decline in Sales Volume: Due to uncertainty in the market and increasing prices of commodities, expecting high volume sales from customers is useless. Thus, Sales are likely to decrease. Apart from this, many products fall under DPCO and their prices are very high. Selling these products results in an insignificant margin.

Conclusion

Post lockdown, the general impacts on the PCD Pharma franchise industry have been moderate given the potential benefits and opportunities presented in India. Companies with large inventions with good working capital will be able to survive this epidemic, but companies that rely solely on manufacturers will suffer various injuries.