A doctor writes down the name of a drug. The chemist gets one strip of a wall full of hundreds of brightly coloured boxes. The patient reads the dosage instructions, the price and pays.
There may be another strip in the same shop with exactly the same active ingredients for a fraction of the price. The patient may never know. Generic medicines are supposed to act as commodities. Once a patent expires, multiple manufacturers enter the market with the same molecule, driving down prices through competition. India complicates the picture. The medicine may be generically similar but economically branded.
The Generic With a Brand Name
A branded generic is an off-patent medicine marketed under a company’s chosen brand rather than primarily by its scientific name. India has an extensive generic market. The Competition Commission of India (CCI) estimated that branded generics made up ‘about 87% of the Indian pharma market,’ while unbranded generics made up ‘a much smaller part’ (Press Information Bureau).
Take amoxicillin with clavulanic acid, an antibacterial combination. The CCI study found that there were 217 companies that sold this combination under 292 brands. A pack of six tablets varied in price between ₹40 and ₹336 – a difference of more than eight times (mint). That is a far bigger difference than most people would see in the same product in two different shops. It is another market, one that surrounds the same molecule.
The Patient Is Not the Main Decision Maker
In a typical consumers goods market, the person buying will often have the final say. A person buying soap will compare prices and value for money. A person buying a pair of phones may compare reviews.
With medicines, the patient consumes and pays for the product, but the doctor typically writes the prescription. The chemist controls the choice of drugs stocked and may decide whether to substitute one for another if permitted to do so. The manufacturer must convince someone other than the consumer, namely, the prescriber. This makes branding a critical factor in establishing trust for the generic drug. A doctor used to getting branded drugs may continue doing so even when cheaper generic alternatives are available despite having the same active ingredients. Pharmaceutical companies compete for reputation, relationships, and availability rather than price. The printed price tag is only one consideration.
Why Chemist Margins Matter
Another factor influencing the margins is distribution. A manufacturer can incentivise a retailer to carry its medicine by giving them a bigger discount. A branded generic with a higher maximum retail price can provide more flexibility to discount rates and profit margins along the distribution chain. The CCI concluded that “the competition in the pharma sector was hampered by intense generic competition and high trade margins” and that “retail margins were on average 28 percent of the customer price, although these varied materially across the sample products.” (TaxGuru)
The manufacturer that sets the highest price is not necessarily the one with the highest production costs. Partly because of branding, partly to capture greater distribution profits, the medicine can fetch a far higher price.
It is a strange situation. While hundreds of manufacturers make the same molecule, the patient is forced to compare on price within this limited set of options available at the chemist. The brand name may be a reassurance to the doctor or patient that the production process, storage, and quality control are up to standard.
Trust Is Economically Valuable
Many patients do not always opt for the cheapest generic because medicine is not an ordinary purchase. A cheap shirt may not fit well or be made of poor-quality fabric, but a cheap generic drug may be lethal. Even when generic medicines meet standard regulations, doctors and patients continue to rely on established brands due to concerns about production, storage, and quality. Firms understand this and invest significantly in ensuring that their brand name generates trust with doctors and patients. A brand is an assurance of quality beyond the minimum regulatory requirements of the market.
That is why appealing to price alone may not be sufficient to encourage a shift to cheaper generic alternatives. Even if the patient is willing to buy a cheaper generic option, they may need to have confidence that it truly is interchangeable with their established drug in terms of therapeutic efficacy and safety. Patients, however, should not be encouraged to switch generic brands on their own. It must be done with the approval of a doctor or pharmacist who can determine whether the substitute is appropriate for their condition and comparable in terms of dosage. The economic challenge is that the question “Is this appropriate?” is frequently not simple or obvious.
The Jan Aushadhi Counter-Market
The Pradhan Mantri Bhartiya Janaushadhi Pariyojana initiative aims to create a parallel market for cheaper generic medicines of approved standard. As of June 30, 2026, there were 20,149 Jan Aushadhi Kendras across India distributing 2,110 medicines and 315 surgical or medical devices. According to the government, the medicines are available at “approximately 50-80% lower prices than the branded ones.” (Press Information Bureau)
The project’s emphasis on quality includes a mandate to procure medicines from “approved manufacturers” as well as “testing of the medicines in the government approved laboratories before distribution.” (Press Information Bureau)
It is a sign of the strength of the market forces that Jan Aushadhi has been able to grow and thrive by responding to the demand for low-cost options. At the same time, it highlights the limitations of such a strategy in addressing the difficulties of a complex distribution system. For an inexpensive generic medicine to work, it must first be available when needed. Doctors must feel confident in recommending generic names, and patients must know where to find these medicines and feel reassured in their choice. Lack of availability drives people back to established networks of trust, namely, the private commercial pharmacies. Price competition alone is insufficient to overcome informational hurdles in pharmaceutical markets.
Ask for the Molecule
Asking not to buy more expensive medicines and instead to buy cheaper ones is a good start. But it doesn’t go beyond the obvious and begin to ask the important questions. What is the generic name of the drug? Are there any other approved substitutes besides the ones the doctor has selected? Why did the doctor choose this particular brand over other options? How much would a comparable generic drug in the same category cost?
These questions raise the issue of price to other consumers of the drug. The doctor, the chemist, and the manufacturer must have thought about it because they have made choices based on it. India produces generic medicines for much of the world. It is a competitive market where manufacturers scramble to carve out a niche. These dynamics do not change because one person selects, another purchases, and a third sells. The medicine that comes in a strip from the chemist may be generic, but the route to get it there has been branded at every step.