How to calculate the real profit on a medicine (bonus and discount included)

Why the "margin" on the carton is not your profit

Every medicine pack in Pakistan has a printed maximum retail price (MRP). You buy from a distributor at a lower rate, and the gap looks like your profit. But the distributor's invoice often has more in it: a bonus (extra packs free), a trade discount, sometimes tax. If you ignore these, you cannot tell which company or deal is really paying you.

This guide shows a simple way to find your net rate - the real cost of one pack - and your real profit.

Step 1: Find the cost of one pack

Take the total you pay and divide it by the total packs you receive, including the free ones.

Example (made-up numbers for illustration): the distributor offers 10 packs at Rs 100 each, with a bonus of 1 pack free on 10.

1. You pay: 10 x Rs 100 = Rs 1,000
2. You receive: 10 + 1 = 11 packs
3. Net rate: Rs 1,000 / 11 = about Rs 90.90 per pack

So the "bonus" is the same as roughly a 9% discount. A trade discount stacks on top: if you also get 5% off the Rs 1,000, you pay Rs 950 for 11 packs - about Rs 86.36 per pack.

Step 2: Compare with the MRP

The trade price is normally the MRP less the 15% retailer discount, so a Rs 100 trade price goes with an MRP of about Rs 118. At that MRP your profit per pack at the net rate of Rs 86.36 is Rs 31.64, which is about 27% of the MRP (or about 37% on your cost). Be clear which of the two you are talking about. Shop owners and distributors often say "margin" when they mean different things, and that is how people feel they are earning more than they are.

Step 3: Compare two deals properly

Distributor A offers 10+1 bonus. Distributor B offers 8% discount with no bonus. Which is better? Do not guess: work out the net rate of each.

• A: Rs 100 x 10 = Rs 1,000 for 11 packs = Rs 90.91 each
• B: Rs 100 less 8% = Rs 92.00 each

Here A is better. But if B's discount were 10%, B would win at Rs 90. The answer changes with the numbers, so calculate every time. The free medicine net rate and profit calculator does this for you and can compare two deals side by side.

Do not forget what eats the profit

A good net rate on paper can still lose money. Check these as well:

• Expiry: one expired carton can wipe out the profit on several good ones. See medicine expiry management.
• Returns: many companies take back near-expiry stock only within a fixed window. A missed window is a lost cost.
• Udhaar (credit): profit you have not collected is not profit yet. See customer credit management.
• Loose sales: if you sell strips or tablets from a pack, price the loose unit so the whole pack still earns what you expect.
• Tax and charges: include any tax or carriage that appears on the distributor's invoice.

You can also test your whole shop, not just one medicine, with the free shop profit and break-even checkup.

A note on prices and rules

Prices of registered medicines are set through the Drug Regulatory Authority of Pakistan (DRAP) pricing policy, and increases for manufacturers and importers have in the past been capped by notifications linked to inflation. In August 2026 news reports (for example ProPakistani) said the government asked DRAP to review the pricing formula and importer and retailer margins, while the Health Secretary said no decision had been taken. Rules may change, so check the current notifications on the DRAP website and ask your distributor or pharmacy association before relying on any margin figure. This guide explains arithmetic, not the law.

How Alpha helps

When you enter a purchase in Alpha, you record the batch, expiry, pack size, bonus quantity, trade discount, tax and the supplier invoice number, so your cost per pack is not a guess. You can compare your entry with a view that looks like the distributor's own invoice. Alpha also gives reports for sales, purchases, stock valuation and profit and loss, with Excel and PDF export, and an expiring-soon list so profit is not lost on dead stock. See Alpha for pharmacies and the prices: plans start at Rs 2,500 a month, with a 7-day free trial.