The difference is promotion. A distributor is paid to move stock. A PCD partner is paid to create demand and then move stock. Everything else — margin, territory, who bears expiry, how you get out — follows from that single distinction.
If your relationships are with prescribers, the franchise is worth more to you. If you have a delivery network, credit discipline and working capital, distribution is. Here is the comparison in the terms that decide it.
The one-line difference
In a distribution arrangement you are a link in a supply chain. Demand already exists, or somebody else creates it, and you make sure the goods are there when it lands.
In a PCD arrangement you are the demand. You detail the products to doctors, call on chemists, and the prescriptions that follow are the reason your own orders grow. The wider margin is not generosity. It is the cost of a medical representative that the company is no longer carrying.
What a distributor actually does
You buy at a trade rate, hold stock, and supply chemists, hospitals and sub-stockists in your area. Orders come to you because the brand is already prescribed, or because you carry the range a chemist wants on one invoice.
The work is logistics and credit. You are judged on whether the item is on the shelf when someone rings at four in the afternoon, and on how long you can afford to wait to be paid. There is usually no promotional obligation, and usually no exclusivity — another distributor in the same city may carry the same products.
Margins are thinner than franchise margins, and volume is the compensation. A distributor carrying a dozen companies can build a substantial book without ever meeting a doctor.
What a PCD partner actually does
You take a defined territory and a product list, buy at net rates, and promote the products yourself. The company supplies the brand, the packing and the promotional inputs. You supply the field work and the working capital.
If you are not doing the field work, you are a distributor operating under a franchise agreement, and the numbers will say so inside two quarters. The territory protects you from another partner of the same company. It does not protect you from the same molecule arriving under a different brand.
Side by side
| PCD franchise | Distribution | |
|---|---|---|
| What you are paid for | Creating demand, then supplying | Supplying reliably |
| Territory | Usually exclusive, in writing | Usually shared |
| Whose brand | The company’s | The company’s |
| Promotion | Yours, and expected | Not expected |
| Typical margin | Wider | Thinner, on more volume |
| Companies you can carry | Few — one deep is normal | Many — ten shallow is normal |
| Who owns the prescriber relationship | You, in practice | Nobody in your chain |
| Expiry and breakage | Negotiable, often yours | Negotiable, often yours |
| If sales stall | Territory rights can lapse against volume conditions | You simply order less |
| Exit | Harder — the brand goes back, the doctors stay | Easier — stop ordering |
Two rows decide most cases. Who owns the prescriber relationship sets your leverage at renewal: if the doctors in your district write the brand because of you, the company has a reason to keep you. And if sales stall is the row that surprises people — exclusivity almost always sits on top of a volume condition, so a quiet quarter can cost you the territory you thought you had bought.
Which one your background points to
A PCD franchise, if
- you have worked as an MR in this territory and the prescribers know your name;
- you can fund stock through a full sales cycle without needing the next payment to fund the next order;
- you want the margin that rewards field effort, and you intend to do the field effort;
- you are content to go deep on one company’s range rather than wide across many.
Distribution, if
- you already have delivery reach and storage;
- your relationships are with chemists and hospital purchase departments, not doctors;
- you would rather carry ten companies shallow than one deep;
- credit management is something you are good at rather than something you dread.
Both routes need the same paperwork before anything ships. The Drug Licence, GST registration and PAN are not negotiable in either model.
Where people get it wrong
- Taking a franchise for the exclusivity and then not promoting. The exclusivity is conditional. Read the volume clause before the rate list.
- Comparing a franchise net rate to a distribution trade rate. They are not buying the same thing. One includes the obligation to sell.
- Underestimating working capital. The opening order is not the number that matters. The stock you must hold through a full cycle is.
- Booking a territory before the licence is in hand. The territory can be reserved on a promise. The goods cannot move.
- Assuming distribution carries no obligations. Most distribution agreements have volume and payment terms too, just without the detailing.
We supply on both models. For a firm we have not dealt with before, we would rather start you on a small distribution order than hand you a territory — it costs both of us less to find out we are wrong about each other. If you want the territory on the first call, we are probably not the right supplier for you.
Common questions
Is a PCD franchise the same as a distributorship?
No. A distributor stocks and supplies. A PCD partner also promotes the brand in the field and generally holds territory exclusivity in exchange.
Which one earns more?
Per pack, the franchise margin is wider. Per year, a distributor carrying several companies can earn more on volume. The honest answer depends on whether you will actually do the detailing.
Can I do both?
Commonly, yes. Many firms hold a franchise for one company’s range and distribute for several others. Check that your franchise agreement does not restrict competing products.
Do I need a different licence for each?
No. A wholesale Drug Licence covers supply to trade in either model. Retail sale to patients is a separate licence.
Which suits a first-time entrant?
Distribution, usually — less capital tied up, no promotional commitment, and a shorter route to finding out whether the supplier delivers on time.
Not sure which one you want yet?
That is a normal place to start. We supply 77 formulations across 23 therapeutic ranges from Sonipat — ISO 9001 certified, GST registered, in wholesale supply since 2000. Tell us your territory and your prescriber base and we will say which arrangement makes sense, including when the answer is neither.
This article compares two commercial arrangements in general terms. It is not legal or financial advice. Agreement terms vary between companies and should be read in full before signing.