Reliance Retail, the retail venture of Mukesh Ambani, is in the final stages of negotiations with Sandoz, the second largest generic company in the world, to outsource generic drugs manufactured by Sandoz.
The company, which is expected to sign the agreement with Sandoz soon, is also in talks with a major Mumbai-based drug distribution group, for entering into a sole supplier deal for selling other companies? drugs through Reliance Retail?s outlets. Sandoz is the generic drugs arm of Swiss pharmaceutical major Novartis.
Reliance Retail, which is planning to open about 5,000 Reliance Fresh outlets, its retail chain of shops, within the next two years, will open one chemist shop inside each of its retail shop. When contacted, a Reliance spokesperson declined to comment on the move.
As per the proposed deal, Sandoz will manufacture all of its branded generic drugs at its manufacturing sites in India. These will be marketed by Reliance Pharmaceuticals Ltd, the wholly-owned subsidiary of Reliance Life Sciences.
Reliance will open exclusive chemist?s shops for Sandoz drugs in each of its retail shops, sources close to the development told FE. As the company can cut down on the 10-16% margins which chemists earn, drugs can be sold cheaper in retail shops, the source added. In South Korea, Sandoz has a similar deal, called partner labeling, with the LG Group.
As per the deal with wholesale distributor, Reliance Retail will buy the drugs of other pharmaceutical companies from the wholesale distributor, and will sell them through its retail shops.
The move to buy directly from the manufacturing company achieves significance in view of the large scale proliferation of spurious drugs in the country. In a bid to resist the entry of corporate giants into drug retailing, the All India Organisation of Chemists & Druggists (AIOCD), the umbrella organiSation of 5 lakh chemists across the country, is also exploring the possibility of exclusive tie-ups with major pharma companies in India.
Sandoz, as part of utilising the low cost manufacturing services in India, has set up facilities at Kolshet, Kalwa, Mahad and Turbhe in Maharashtra. The Mahad facility, equipped with the rifampicin plant, was transferred to Sandoz from Novartis India.
