This was our PowerPoint Presentation in 71st IPC, Chennai, during my 4th year of Pharm.D. I thank my co-author, Dr P. Dhanalakshmi, for her contribution to this study. The study mainly focuses on the availability of drugs in a pharmacy and auditing of stocks using ABC, VED Matrix Analysis.

1. A STUDY OF DRUG EXPENDITURE AT RMMCH 24 HOURS
PHARMACY: AN ABC-VED ANALYSIS
Chathreian SR1
, Dhanalakshmi P
1
Department of Pharmacy, Annamalai University, Chidambaram, Tamil Nadu
CHATHREIAN SR
Annamalai University
Annamalai Nagar, Chidambaram
chathreian@gmail.com
7449203968
Contact
1. Kathleen Holloway., et al, World Health Organization Report on Drug and therapeutics committees a practical guide, pg. 71-81, 2004.
2. Gupta S, Kant S. In: Hospital stores management – An integral approach. New Delhi: Jaypee Brothers Medical Publishers(P) Ltd; 2000. Inventory control; pp.60-72.
3. Ramanathan R. ABC inventory classification with multiple-criteria using weighted linear optimization. Comput Oper Res.2006; 33: 695-700.
References
The annual drug expenditure at RMMCH 24 Hours Pharmacy, Annamalai Nagar, Tamil Nadu was analysed by using ABC
(Always, Better and Control) and VED (Vital, Essential and Desirable) analysis technique. The ADE for 992 drugs available in
the pharmacy in the period of 2017 to 2018 was found to be Rs.45,50,976. On ABC analysis, 11.29%, 29.13% and 59.58%
drug items were found to be Always, Better and Control items that accounts for 69.91%, 19.94% and 10.15% annual drug
expenditure. About 10.18%, 57.35% and 32.46% drug items were found to be Vital, Essential and Desirable items which
holds for about 17.14%, 72.38% and 10.48% of annual drug expenditure. Further by ABC – VED matrix analysis 20.26%,
53.32% and 26.42% drug items were found to be Category I, II and III items accounting for 73.11%, 23.33% and 3.56% of
ADE. Thus, this inventory control study helps in maintaining efficient stock management and it should be mandatory in all
health care systems which provides a better sanguinic relationship between both the patient and the dispenser in all
aspects.
Abstract
Introduction
Permission was obtained from concerned authorities to collect the data. Data collection includes number of drugs and list of drugs
in the pharmacy. Along with it other than drugs such as surgical dressings, sutures, etc were also taken into account for study
purpose. Finally, the Annual Drug Expenditure incurred on each item of the pharmacy for the year 2017 to 2018 data was collected.
Then by using MS Excel spreadsheet the statistical data analysis were carried out.
ABC ANALYSIS
ABC analysis involves the categorization of drugs based on the availability with low to high cost of expenditure (Always, Better
and Control) with the items that yield high to low profit. The cumulative cost of expenditure of items were calculated. The
cumulative cost percentage composed of 70%, 20% and 10%.
VED ANALYSIS
VED analysis is carried out by commercial sale and patient’s consumption of drugs. In a hospital, certain drugs must be
available all the time. Those kinds of drugs come under V (Vital). The items with low criticality and that might be available in a
hospital, they are categorized under E (Essential). Some drugs even with their shortage won’t affect the hospital and those are
classified under D (Desirable).
ABC-VED MATRIX ANALYSIS
By cross tabulating the ABC and VED analysis, the ABC-VED matrix was analyzed. By that three categories (I, II and III) were
obtained. Category I denotes the items relating to AV, AE, AD, BV and CV. Meanwhile category II states BE, CE and BD
subcategories. Finally, category III constitutes CD item. In these categories, the first and second alphabet denotes ABC and VED
analysis.
Methods and Materials
ABC ANALYSIS
About 11.29% (112), 29.13% (289) and 59.58% (591) items were categorized as A, B and C items respectively that
amounting for 69.91% (Rs.31,81,587.32), 19.94% (Rs.9,07,465.00) and 10.15% (Rs.4,61,924.06) of ADE of the
pharmacy.
VED ANALYSIS
10.18% (101), 57.35% (569) and 32.46% (322) stocks were categorized as V, E and D items that corresponds to
17.14% (Rs.7,80,037.28), 72.38% (Rs.32,93,996.4) and 10.48% (Rs.4,76,942.2) of ADE of the pharmacy.
ABC-VED MATRIX ANALYSIS
In ABC-VED matrix analysis 20.26% (201), 53.32% (529) and 26.42% (262) items were under the Category I,
Category II and Category III items that corresponds to 73.11% (Rs.33,27,218.55), 23.33% (Rs.10,61,742.7) and 3.56%
(Rs.1,62,014.74) of ADE of the pharmacy.
In a tertiary care hospital, it is mandatory to check the availabilities of drugs and work with stupendous stock
management. Because in case of any lack of medicines may cost a life to expire and it is not the proper way of
hospital management. From this study, we observed that in ABC analysis that a minimal products (Always items)
occupies the majority of ADE. In VED analysis, (Essential) products are must needed items in a pharmacy which
involves huge capitalization. Finally, from ABC-VED Matrix analysis, that the (Category I) products has the maximum
ADE.
Discussion
The annual consumption of drugs expenditure for the year 2017-2018 at RMMCH 24 hours pharmacy was found to
be Rs.45,50,976. This study shows the impact of scientific inventory management tools in pharmacy drugs store with
priority monitoring, efficient profitability and judgement in purchasing and distribution of drugs as per ABC, VED and
ABC-VED matrix analysis. This way of handling helps us in meet out with higher profitability with stupendous
sanguinistic utilization of funds. So, there must be routine and proper checking of these availabilities of drugs in a
pharmacy for better hospital management. By this we can avoid running out of stock situations and yield maximum
profit with minimum expenditure. Thus, this one of the inventory control method can improve the health care
system efficiently and with satisfaction.
Conclusion
In majority of organizations the cost of materials forms a substantial part of the selling price of the product. The interval
between the receiving and purchase parts and transforming into final products varies from industries to industries
depending upon cycle time of manufacturing. Materials are procured and held in the form of inventories. It is there
necessary to hold inventories of various kinds to act as a buffer between supply and demand for efficient operation of the
system. Thus an effective control of inventory becomes in must for smooth and efficient running of the production cycle
with least interruptions. The stocking of anything that is tangible in order to meet the feature demand is the subject matter
of inventory theory.
Inventory generally refers to the materials in stock, it is also called the idle resource of an enterprise. Inventory represents
those items which are either stocked for sale or they are in the process of manufacturing are they are in the form of
materials which are yet to be utilized. A large number of items are required by hospitals for providing service to the
patients. Inventory management is essential to maintain a large size inventory for efficient and smooth production and also
for sales operation. It also minimizes a firm’s investment in inventory with a view to gain maximum profit. Thus, inventory
has to be maintained at a level known as the optimum level of inventories.
The main objective of inventory control is to maximize customer service and with minimum investment in inventory at low
cost plan operation, decrease wastage and maintain optimum balance, finally there should be sufficient stocks to satisfy
customers and effective demand supply cycle must be maintained well.
By, this we can overcome certain problems like running out of stocks and can rise the annual profit with minimal
expenditure with efficient stock control management. Thus, the study is to identify the stocks need to be identified for
monitoring with priorities, analyze the annual consumption of items of pharmacy, find the expenditure incurred on the
items for the year 2017-2018.
Results
Category No. of items % of items ADE(Rs.) % of ADE of the pharmacy
A 112 11.29% 31,81,587.32 69.91%
B 289 29.13% 9,07,465.00 19.94%
C 591 59.58% 4,61,924.06 10.15%
V 101 10.18% 7,80,037.28 17.14%
E 569 57.35% 32,93,996.40 72.38%
D 322 32.46% 4,76,942.20 10.48%
I 201 20.26% 33,27,218.55 73.11%
II 529 53.32% 10,61,742.70 23.33%
III 262 26.42% 1,62,014.74 3.56%