India’s healthcare industry is at an important turning point. While the country has become a global leader in pharmaceuticals, exporting to nearly 200 countries, the supply chain within India still has some serious gaps, especially around credit management. The Indian healthcare supply chain market is expected to cross USD 103.8 million by 2030, growing at a rate of 10.5% from 2024. But to support this kind of growth, we need a stronger financial foundation. Right now, poor credit practices are affecting cash flow, operations, and timely access to essential medicines, especially in smaller towns and rural areas. Credit risk management, which has been ignored for a long time, is now becoming a key part of building a stronger supply chain.

Cash Flow Fragility

Running a healthcare supply chain needs a lot of capital. Even though it deals with essential goods, payments are often delayed, billing cycles are long, and cash flow is unpredictable. Distributors are stuck between manufacturers and retailers, trying to offer credit while managing their finances, usually without any reliable credit assessment tools. Things get worse during demand spikes or regulatory changes. One credit default can affect the whole chain. Without solid credit management, distributors become cautious, limit their reach, and this impacts how easily medicines are available in the market.

Overdependence on Informality

In India, the pharma trade relies a lot on trust and old relationships. Credit is often given based on verbal promises or long-standing personal ties. But in such a big and diverse country, this informal system causes problems. Smaller or newer businesses often don’t have the same visibility and get left out, while those who regularly delay payments may still get credit. This makes it difficult for new players like startups, digital pharmacies, or regional distributors to grow and compete. Also, due to the lack of a verified credit data system like CIBIL (which is available for individuals and banks), many businesses face challenges expanding into new territories. A transparent, common credit system can solve this and create a level playing field.

The Cost of Inaction

Bad credit management doesn’t just cause business losses it can directly affect public health. When working capital is stuck or unpaid, the supply of important medicines and equipment can slow down. This is especially risky in Tier 2 and Tier 3 cities, where there may not be many alternatives for distribution. India is also increasing its global healthcare presence, and supply chain delays or defaults can damage its reputation. Without credit data and accountability, the system becomes weak and vulnerable, especially during crises like pandemics or global shortages.

Tech-Enabled Credit Evolution

Modernising credit management is no longer optional, it’s necessary. New tools like AI-based credit scoring, behaviour tracking, and secure APIs are changing how credit decisions are made. These systems don’t just track payments; they can predict risks, check financial health, and even simulate worst-case scenarios. As the pharma industry adopts more technology, credit management tools like these should be as common as inventory or GST software. Automating credit governance helps businesses grow without constantly worrying about non-payments or losses.

Views expressed by: Mannuri Vamshi Krishna, Founder & CEO, MedScore

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