MedPlus Health Services said it changed the way its stores recommend private-label medicines after saying some employees may have gone "a little overboard" in promoting the products.
The pharmacy retailer said it initially encouraged store staff to recommend its private-label medicines and offered incentives to support the effort. As adoption increased, however, some employees may have begun recommending the products to almost every customer, prompting the company to change its approach.
The Indian government has for years promoted the use of lower-cost generic medicines to reduce patients' out-of-pocket healthcare expenses. MedPlus said stores now focus on serving customers by offering both branded medicines and lower-cost alternatives, rather than pushing private-label products.
"We pushed very hard and we made sure that everyone was aware of it and the employees were also heavily incentivised to sell it," Managing Director Gangadi Madhukar Reddy said during the company's earnings conference call. "I think the early adopters very quickly shifted, and after that, maybe our employees would have gone a little overboard in trying to push it to every single customer," he said.
Reddy said the company later scaled back that approach.
"We are now focused on making sure that the customer is completely served, whether it is for brand or whether he is looking for a slightly more affordable kind of medicine. So we offer it. If he takes it, great. If not, that's okay," he said.
He said private-label sales continued to grow in absolute terms, although their share of overall sales declined because total sales increased at a faster pace. The company also saw growth in branded medicine sales after changing its approach.
MedPlus said it now plans to expand private-label sales through advertising and customer awareness campaigns instead of relying primarily on in-store recommendations.
Reddy said the company will use influencers and other marketing channels to attract customers looking for lower-cost alternatives. It also plans to train store employees to better explain its private-label medicines.
"We'll also try and get our employees to be slightly better salespeople," Reddy said. "The combination of both... will help us start building up again." He said the company expects the decline in private-label sales mix to stabilise during the current quarter before returning to gradual growth.
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