Also there is increasing trend in pharmaceutical industry to appoint C&F agent instead of super distributors. The basic reason is to minimize the cost of distribution by saving 4% C.S.T. (Central Excise Tax) which is not applicable to the sale while transferring goods from company’s warehouse to C&F agent and another reason is that company has a better control over its sale and receivables and reach up to micro level of market also.
Beside this C&F agent is like a company managed own depot because C&F agent has to bill all invoices on behalf of company guidelines and company has a tough control over its activities. Furthermore C&F agent has its own premises and network was company gets full exemption from investing on it.
Certainly there are some companies who use both C&F agents and own depot concept simultaneously in specific areas. The best examples of it are GlaxoSmithKline Ltd and Cipla Ltd that are having maximum own depot to sale the product across the country and maintain less cost on high volume of sales. This case is true especially for their new divisions like Animal Healthcare Product in case of Glaxo and Consumer and O.T.C. products in case of Cipla Ltd.
Today institutional market is another opportunity for sale and distribution where profitability is more as goods transfers directly to institutions are by avoiding retail chemist margin. Some of these institutes having high contributory sale are Railway hospitals, E.S.I. (Employee State Insurance) hospitals, Armed forces Hospitals, Public Healthcare Centers, Ordinance factories operated healthcare centers etc. where Director General of Supplies and Disposals calls all India tenders against short supply of medicines.