Sonton Pharmaceuticals: Managing a Difficult Distributor

Sonton Pharmaceuticals Private Limited (Sonton) is a growing pharma­ceutical company in India with a wide range of pharmaceutical products. Sonton boasts a line of 26 brands, including painkillers, diabetic, gastropa- thy, neuropathy, and cardiac products. Sonton’s logistics management was like that of any other pharmaceutical company in India: the manufactured pharmaceutical products went to the central warehouses of the company from the production department. From these warehouses, the products moved to the carrying and forwarding agents (C& F) in the different states, who in turn supply these to 240 distributors in the different parts of the country (refer Exhibit 1). These distributors then supply the products to the retail pharmacies all across the country. The products move to the final customers through these pharmacies.

Ankush Thakurta is an Area Manager for Sonton Pharmaceuticals in Jamshedpur. His team is doing well and is on 102 percent target achieve­ment for January-June period with a growth of 16 percent. In June 2017, there was a 10 percent bonus offer on the diabetic range of products but one dealer, Kushal of D R Distributors in Sonari, was already in possession of high stocks of the diabetic range (equal to 45 days of sales) so he could not buy any diabetic range of product during the bonus period. Now, he is asking for the bonus offer on the stocks available with him at the start of bonus offer (as on June 1, 2017). D R Distributors contributes 7 percent of Ankush’s yearly sales of ’60 million.

Kushal is the president of the wholesaler association in Sonari and is a very influential person in the pharmaceutical market. As of now, Sonton does not have any policy to give bonus offer on the shelf stock. It is very important for Ankush to solve this issue as Kushal can create problems during the launch of new products as it is compulsory in market to take permission from the association before launching new products and brand extensions. D R Distributors has also stopped the last payment of ‘250,000 to put pressure on the company.

Varun, a sales executive in the area, is new and is unable to solve this issue as he himself has pushed the extra stocks of the diabetic range of products to D R Distributors in April 2017 to earn his incentives of ‘15,000. Ankush is planning to visit D R Distributors with Varun to solve this issue with a win-win outcome.

Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.

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