7,000 Retailers Strike Against Novartis, Sandoz

(MoneyWatch)  Only in India: 7,000 drug retailers have refused to carry products from Novartis and its generic unit Sandoz because the company sells drugs direct to consumers at the same price as the retailers do, according to The Economic Times. By doing so, the companies keep the profit margin that's built in for retailers. The retailers have refused to handle any of the 198 drugs the two companies make. They say the pair are violating a drug price control order that gives those margins to the retailers.

The context of the fight raises an interesting geopolitical question: How far along is India in its quest to change itself from a backward, corrupt Third World tourist stop into a modern economic powerhouse of the East? In this case, the specific issue is the state of India's refrigeration infrastructure.

The companies argue that the direct sales were established for patients who need specialty drugs that need careful handling, such as constant refrigeration. The retailers claim they already have that and other companies haven't complained: The ET:

A Novartis spokeswoman said ... Such products are required to be stored under special conditions, including air-conditioning for 24 hours, refrigeration at specific temperatures and continuous maintenance of automated temperature logs," she said, adding the abuse of these conditions could reduce the efficacy of the life-saving drugs, thus harming patients.

She said, in India, the cold chain supply infrastructure still has a long way to go before it meets international standards, therefore the boycott is unwarranted at this point of time. "In fact, the boycott goes against the interest of the patients as critical drugs will go off the shelves," she said.

But the retailers have refuted this claim by saying that they are selling similar niche drugs of other companies and its stores meet all the technical requirements to sell such products.