A PCD pharma franchise is profitable when the gap between the price you buy at and the price you sell to chemists at covers your field costs, your credit and your expiry losses, with money left over. The company’s rate list sets the gap. How much of it you keep depends on how many prescriptions you build and how quickly chemists pay.
Published margin figures for this business run from the teens to 80 per cent and contradict each other, often on the same page. None of them is a number you can plan on, because none of them is your rate list. What this page can do is show where the margin comes from, which parts the law fixes, and which numbers to ask for.
The price chain
Four prices matter:
- PTS, price to stockist: what you pay the company.
- PTR, price to retailer: what you charge the chemist.
- MRP: the most the chemist can charge the patient, tax included.
- Net realisation: what you actually collect after schemes, returns and bad debts.
Your gross margin is PTR minus PTS. The chemist’s margin is MRP minus PTR, less tax. The formula everyone quotes, gross margin per cent equals (PTR minus PTS) divided by PTR, is correct and tells you almost nothing until the PTS is in writing.
What the law fixes
For scheduled formulations, the medicines on the national essential list, the Drugs (Prices Control) Order, 2013 sets a ceiling price: the average price to retailer plus a 16 per cent margin to the retailer (DPCO 2013, NPPA). The chemist’s margin on these products is regulated, so the room for the company and its partners sits between PTS and PTR.
For non-scheduled formulations, the company sets the price, but under paragraph 20 of the same order it cannot raise the MRP by more than 10 per cent in any 12 months. A partner cannot count on price increases to rescue a thin margin.
GST is the other fixed line. Since 22 September 2025 most medicines carry 5 per cent (All India Radio). If you are GST registered, the tax paid on purchases is set off against the tax collected on sales, so it moves through the chain rather than out of your margin.
A worked example, using only the regulated figure
Take a scheduled product with a PTR of ₹100. The 16 per cent retailer margin puts its ceiling price at ₹116 before local taxes, and that ceiling is not negotiable. Your gross margin is ₹100 minus whatever the company charges you for the strip. That PTS is the most important number in the deal. Get it in writing, product by product, before you place an order.
From gross margin to net
| Line | What drives it |
|---|---|
| Gross margin | PTR minus PTS, from the company’s rate list |
| Less: field costs | Representatives, travel, product literature |
| Less: samples and schemes | Free goods offered to chemists to stock a new product, and samples within the 2024 code |
| Less: freight | Who pays for dispatch, and how often you reorder |
| Less: expiry and breakage | The company’s return policy, and how closely you match stock to sales |
| Less: cost of credit | Chemist credit days, and what your money costs you |
| Net margin | What is left |
Expiry and credit are where most new partners lose money, and neither shows up in a rate list. The rate is argued over for a week. These two quietly take more over the year.
Margin by product category
Companies generally publish wider gaps on dermatology, nutraceutical and some specialty lines, and narrower gaps on general range and injectables, which earn on volume. Two cautions. A wide gap on a product no doctor in your district prescribes is a wide gap on stock that expires. And a scheduled molecule carries the DPCO ceiling whatever division it sits in. Choose the range by your prescriber list, then read the PTS, not the other way round.
Break-even
You break even when monthly gross margin covers monthly fixed costs:
Doctors worked × prescriptions per doctor per month × gross margin per unit = fixed monthly costs.
The first two numbers start near zero and build with repeat visits. Anyone who quotes you a break-even month without knowing your doctor list is guessing. What it costs to get to the starting line is in what it costs to start a PCD pharma franchise.
How to keep more of the margin, within the rules
The Uniform Code for Pharmaceutical Marketing Practices, 2024 prohibits gifts, travel, hospitality and cash to healthcare professionals and their families, caps brand reminders such as pens or diaries at ₹1,000 per item, and requires samples to be reasonable in quantity and not an inducement. What works inside those rules is ordinary and slow:
- A fixed call list. The same doctors, on a regular cycle, with accurate product information.
- Stock before detailing. Make sure the chemists near each doctor hold the product before you ask the doctor to prescribe it. A prescription the chemist cannot fill gets substituted, and the refill goes with it.
- Collections on a calendar. Credit days you do not enforce are a discount you did not agree to.
- Reorder on what moves. Drop what sits after two cycles. Expiry is a margin line, not bad luck.
- Consolidate orders. Freight on ten small reorders costs more than freight on three.
- Hold the rate. Ask the company how often its rate list changed in two years. A rate that holds for the term is worth more than a lower opening rate that does not.
Stock-outs cost margin twice
When a product runs out you lose the sale, and often the patient, because the chemist substitutes and the doctor’s next prescription may follow the substitute. Ask your supplier how long dispatch takes to your district, and keep a buffer on your two or three fastest products. Our guide to verifying a pharma supplier covers how to test that before the first large order.
When we are the wrong partner
If your plan depends on gifts or trips for doctors to win prescriptions, we are not the right partner. The code prohibits it, and we will not supply against a plan built on it.
Questions people ask
What is the profit margin in a PCD pharma franchise?
Your gross margin is the price to retailer you charge chemists minus the price to stockist you pay the company, product by product. It varies by company and product, so ask for the rate list in writing. Net margin is lower once field costs, credit, freight and expiry are taken out.
How do I calculate the margin?
Gross margin per unit = PTR minus PTS. Gross margin per cent = (PTR minus PTS) divided by PTR, times 100. Net margin = gross margin minus field costs, samples, freight, expiry and the cost of credit, divided by sales.
Is a PCD pharma franchise profitable?
It is when the gap between PTS and PTR covers field costs, credit and expiry with money left over. Published margin figures contradict each other and none applies to your rate list. Expiry and chemist credit are where new partners lose most.
Which products carry the highest margin?
Companies generally publish wider gaps on dermatology and nutraceutical lines and narrower ones on general range and injectables, which sell on volume. The only figure that matters is the PTS on the rate list in front of you.
What is the difference between PTS and PTR?
PTS is the price to stockist, what you pay the company. PTR is the price to retailer, what you charge the chemist. The gap is your gross margin. MRP sits above both and is the most the chemist can charge the patient.
How long does it take to break even?
You break even when doctors worked, prescriptions per doctor and margin per unit together cover monthly fixed costs. Two of those three numbers belong to you, not the company, so anyone quoting a month without your doctor list is guessing.
Get the rate list before you do the maths
Send us the products you are considering. We will send PTS and PTR for each, in writing, so the calculation above uses real numbers. In wholesale supply since 2000.
Regulatory figures checked against the linked sources on 8 October 2026. This is general information, not tax or legal advice.