According to All India Organisation of Chemist and Druggists (AIOCD), which tracks the inventory of pharma companies, average inventory days at the level of stockists fell to 27 in June from 40 days earlier. The first quarter will see downstocking, while the second will see up-stocking, but weakness in the wholesale business. Companies with high stocks levels at distributor points may take this opportunity to correct their pipelines, which means stock levels after GST will not reach the current levels.Companies, however, say secondary sales may help offset the decline in dispatches. To avoid this, retailers are maintaining lower inventory.Interestingly, manufacturers also favour lower inventories, which would cut down the loss for companies on closing stock. According to a Credit Suisse estimate, if the closing stock is lower by 10 days, the cost of consumer companies will come down around 20 basis points for full year sales.

Source: Economic Times June 16, 2017 18:56 UTC