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The All India Organisation of Chemists and Druggists (AIOCD) has issued a new, internal mandatory circular demanding immediate and strict compliance from pharmaceutical stockists and companies regarding the settlement of loss before expiry (LBE) claims.
This decisive directive, which sets a hard deadline of December 31, 2025, aims to resolve outstanding financial disputes and safeguard the profit margins of retail chemists, who often bear the brunt of inventory depreciation and regulatory price shifts.
The circular stresses that failure to adhere to the prescribed settlement methodology will lead to severe organizational action.
The core of the issue stems from the industry’s perpetual challenge of managing near-expiry or slow-moving stock, compounded by recent adjustments in the Goods and Services Tax (GST) structure and MRP changes on essential medicines. Retailers, having purchased stock at higher rates or under older tax regimes, face significant losses when they are forced to sell these products at reduced or revised MRPs mandated by the government. This mandatory circular provides the necessary leverage to chemists to recoup their invested capital.
To standardize the process and eliminate ambiguity, the AIOCD has officially mandated a clear, non-negotiable formula for LBE claims. The circular instructs that all claims on returned near-expiry stock must be settled strictly at the prevailing industry standard of "MRP minus 25%" to calculate the claimable retail price. This standardization is critical, as it ensures that small and medium-sized chemists are not subjected to arbitrary deductions or protracted settlement delays that severely impact their daily working capital.
Trade bodies confirm this move offers timely financial relief and is a powerful mechanism for discipline within the supply chain. For the thousands of retail pharmacies, the effective and prompt recovery of LBE claims is essential for maintaining liquidity and preventing distress sales or, worse, potential shop closures. The AIOCD’s firm stance reinforces its commitment to protecting the financial viability of its members across the country against powerful corporate entities.
Significantly, this mandatory instruction follows a similar urgent circular issued just last month, demonstrating a consistent and proactive effort by the AIOCD to manage the entire spectrum of regulatory and logistical chaos for its members. That previous internal advisory, dated November 21, 2025, addressed the immediate fallout from a central government notification concerning the sudden ban on 35 fixed dose combinations (FDCs).
The November circular focused on immediate risk mitigation for the trade. It urgently instructed all state and Union Territory bodies to ensure that member chemists immediately ceased the sale and purchase of the 35 banned FDC formulations. Furthermore, it demanded that state bodies actively pressure their respective stockists and distributors to initiate the return and withdrawal of all unsold FDC stock without delay, with a critical focus on ensuring companies promptly issued appropriate and separate credit notes to settle these returns in the next invoice cycle.
By issuing the LBE directive now, immediately following the FDC ban circular, the AIOCD is cementing a strategy of comprehensive protection. Both mandates collectively ensure that retail chemists are shielded from holding unsaleable, legally restricted inventory (FDCs) and that they can promptly recover funds for stock depreciated due to pricing issues (LBEs), reinforcing the organization’s role as the primary guarantor of stability in the pharmaceutical retail sector.
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