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Table of Contents
Year : 2020  |  Volume : 6  |  Issue : 2  |  Page : 104-107

Inventory management of drugs at a secondary level health-care center in Odisha

1 Department of Community Medicine and Family Medicine, AIIMS, Bhubaneswar; Department of Community Medicine, VIMSAR, Burla, Odisha, India
2 Department of Community Medicine and Family Medicine, AIIMS, Bhubaneswar, Odisha, India
3 Department of Community Medicine and Family Medicine, AIIMS; Department of Community Medicine, IMS and SUM Hospital, Bhubaneswar, Odisha, India
4 Medical Officer IN-charge, Community Health Centre, Tangi, Khurdha, Odisha, India

Date of Submission26-Nov-2019
Date of Decision03-May-2020
Date of Acceptance10-Oct-2020
Date of Web Publication24-Dec-2020

Correspondence Address:
Dr. Arvind Kumar Singh
Academic Block, Third Floor, Department of CMFM, AIIMS, Bhubaneswar, Odisha
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Source of Support: None, Conflict of Interest: None

DOI: 10.4103/IJCFM.IJCFM_86_19

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Introduction: Planning the recurring purchases in the pharmacy results in efficient functioning of a health-care facility. Limited studies have explored the inventory management at secondary-care settings. The objective of this study was to analyze the annual drug expenditure of Community Health Centre (CHC), Tangi during the year 2017-2018.
Material and Methods: The annual procurement of, and expenditure incurred on drugs for financial year 2017-2018 drugs was analyzed at the secondary level CHC always, better, control (ABC) analysis, vital, essential, desirable (VED) analysis and combination matrix of ABC-VED which are inventory management techniques based on expenditure, criticality, and combination of both.
Results: Total expenditure for the year 2017–2018 on 232 drugs was 4,606,487 rupees. According to ABC analysis, Category A, B and C constituted 8.6%, 19.4%, and 72% accounting for 70%, 20%, and 10% of the total expenditure. VED analysis showed 21%, 66%, 13% items as Vital, Essential, and Desirable, accounting for 14%, 67%, and 19% of annual expenditure. On ABC-VED matrix analysis, 24.1%, 66.8%, and 9.1% drugs were found to be Category A, B and C, accounting for 74.7%, 24.6%, and 0.7% of annual expenditure.
Conclusion: ABC-VED matrix analysis can be used for effective management of inventory at a secondary level healthcare centre.

Keywords: Annual expenditure, consumables, drug distribution, supply management, stocking cost

How to cite this article:
Dora S, Singh AK, Panda PS, Sahoo JK. Inventory management of drugs at a secondary level health-care center in Odisha. Indian J Community Fam Med 2020;6:104-7

How to cite this URL:
Dora S, Singh AK, Panda PS, Sahoo JK. Inventory management of drugs at a secondary level health-care center in Odisha. Indian J Community Fam Med [serial online] 2020 [cited 2021 Jun 25];6:104-7. Available from: https://www.ijcfm.org/text.asp?2020/6/2/104/304804

  Introduction Top

Pharmacy stores are very essential supportive service of any hospital.[1] The pharmacy is one of the most extensively used therapeutic facilities of the hospital and one of the few areas where a large amount of money is spent on purchases on a recurring basis.[2] In a study, it was revealed that about one-third of the annual hospital budget is spent on buying material and supplies, including medicines.[3] There is need for planning, designing and organizing the pharmacy in a manner that results in efficient clinical and administrative services.[4] The goal of the hospital supply system is to ensure that there is adequate stock of the required items.[5] An inventory is a detailed itemized list of assets held by an organization or institution. The inventory can provide financial information to support economic and budget assessments. Inventory management is a method of maintaining stock of items at a level of lowest purchasing and stocking costs without interference with supply.[6] Inventory management helps in designing appropriate corrective measures so that an uninterrupted supply of such items is maintained. This is of particular importance in resource constraint settings like India where resources are limited, and existing resources must be utilized appropriately.[7]

There are various methods for inventory management. These are Eyeballing technique, Double shelf method or A/B method, Modern techniques: always, better, control (ABC), vital, essential, desirable (VED), fast-moving, slow-moving, nonmoving, scarce, difficult, easy, high, medium, low and season-off-season.[8]

The commonly used techniques are ABC analysis, VED analysis, and ABC-VED matrix analysis. ABC analysis, also known as “Always Better Control,” is an important tool used to identify items that need greater attention for control. According to it, 10% items account for 70% of budget (Category A). Next 20% account for 20% of the budget (Category B) and the remaining 70% account for just 10% of the budget (Category C).[9] The limitation of ABC analysis is that it is based only on monetary value and cost of consumption of items. Some items of low monetary value are vital or life-saving. Their importance cannot be overlooked simply because they are not in Category A.

Therefore an additional parameter of assessment is their criticality by doing a VED analysis. “V” is for vital items without which a hospital cannot function “E” for essential items without which a hospital can function but may affect the quality of the services and “D” stands for desirable items, unavailability of which will not interfere with functioning. VED analysis cannot be considered alone as some of the desirable drugs despite being costly could get included as a priority drug. To overcome the limitations of ABC analysis and VED analysis an ABC-VED matrix is prepared, and drugs are categorized as Category A, B, and C [Figure 1].
Figure 1: Always, better, control.analysis, vital, essential, desirable matrix analysis showing different categories

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  Material and Methods Top

Study site

The study was conducted at Community Health Centre (CHC) in Tangi Block of Khordha district which serves a population of approximately 169,000. CHC, Tangi Block is the field practice area of All India Institute of Medical Sciences, Bhubaneswar [Figure 2].
Figure 2: Map of Tangi block showing different sectors

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It has a store pharmacy and a Drug Distribution Centre. Drugs and consumables from the store Pharmacy are distributed to different PHCs and Sub-Centers. Drugs from Drug Distribution Centre are dispensed to out-patients and in-patients.

Drugs and consumables are procured on a yearly basis at the CHC and supplied by the Odisha State Medical Corporation Limited yearly to the CHC.


All the oral and parenteral drugs along with the consumables procured during the financial year 2017-2018 were included for the analysis. Details of methodolgy are shown in [Figure 3].
Figure 3: Methodology flow diagram

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  Results Top

Total expenditure for the year 2017-2018 was 46,06,487. Total of 232 consumables were analyzed. According to ABC analysis there were a total of 20 drugs in Category A, 45 in Category B, and 167 in Category C. Thus, 8.6% of the items cost 70% of the expenditure, while 72% of the items cost only 10% of the expenditure [Table 1]. According to VED analysis, 48 drugs were classified as Category “V,” 153 as Category “E” and 31 as Category “D.” Around 14% of budget was spent on Category V, 67% on Category E and 19% on Category D drugs [Table 2]. In ABC-VED matrix analysis, around 24.1% of drugs were in Category A, 66.8% in Category B, and 9.1% in Category C. The expenditure in Category A, B, and C were 74.7%, 24.6%, and 0.7% of total expenditure, respectively [Table 3].
Table 1: Always, Better, Control analysis of showing cost incurred by different category of items

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Table 2: Vital, Essential, Desirable analysis of showing cost incurred by different category of items

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Table 3: Costs incurred by different categories of items in Always, Better, Control -Vital, Essential, Desirable analysis

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  Discussion Top

The total cost incurred for procurement of drugs at CHC, Tangi was Rupees 4,606,487 for the financial year 2017-18. This study shows that out of 232 items, 20 (8.6%) items consume 70% (Group A) of the total budget, 45 (19.4%) consume 20% of total budget (Group B) and the rest 167 (72%) drugs consume just 10% of the total budget (Group C) [Table 1]. In our study, 48 (21%) were categorized as Vital, 153 (66%) as Essential and 31 (13%) as Desirable [Table 2]. On ABC-VED matrix analysis [Table 4], 24.1% of the items were in Category A, 66.8% in Category B, and 9.1% in Category C [Table 3].
Table 4: Always, Better, Control - Vital, Essential, Desirable analysis matrix showing the total number of items in each category

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In a tertiary care teaching hospital, study conducted by Wandalkar et al. showed that the total Annual Drug Expenditure (ADE) was Rs. 6, 98, 74, 457. It is more compared to our study which was done at a secondary level care institution. By ABC analysis, it was found that 13.4%, 16.5% and 70.1% items belonged to A, B and C Category respectively, accounting for 69.1%, 19.2%, and 11.7% of ADE which is similar to our findings. VED analysis showed that 50.9%, 40.2% and 8.9% were V, E, and D Category items, respectively, accounting for 55.2%, 41.5% and 3.3% of ADE. By ABC-VED matrix analysis, 57%, 35%, and 8% were found to be Category A, B, and C items, respectively, accounting for 85.3%, 14.2%, and 0.5% of ADE.[6]

Another study conducted in a tertiary care teaching hospital by Gupta et al. the total cost of drugs used was Rupees 5,523,503. Of these 325 drugs, 47 (14.4%) drugs were Category A consuming 70% of total expenditure, 73 (22.46%) drugs Category B consuming 20% and rest 205 drugs (63.7%) Category C drugs cost only 10% of expenditure, which is almost similar to the ABC management of inventory. VED categorization done by consensus opinion of medical officers, found 24 (7.3%) drugs vital, 160 (49.3%) essential and rest 141 (43.3%) desirable. On coupling the two techniques ABC-VED matrix was made and drugs were classified in to Category A (AV + BV + CV + AE + AD) comprising 68 drugs, Category B (BE + CE + BD) 159 and Category C (CD) 98 drugs, being the essential list of drug highest is comparable to our study.[8]

Similarly, another study at tertiary care teaching hospital, PGI conducted by Singh et al., the total ADE on items issued in 2008–2009 and 2009–2010 was Rs 6.04 crores and Rs 4.84 crores, respectively, which is much higher as it is one of the apex institutions of India. ABC analysis of pharmacy store for the year 2008–2009 revealed 11.23%, 24.60%, and 75.4% items as A, B, and C Category items, respectively, accounting for 70.19%, 19.83% and 9.98% of ADE of the pharmacy. It is almost as per the ABC matrix of inventory. VED analysis showed 12.30%, 61.5%, and 26.2% items as V, E, and D Category items, respectively, accounting for 19.56%, 71.12%, and 9.33% of ADE of the pharmacy. However, ABC analysis of pharmacy store for the year 2009-10 revealed 11.08%, 22.16% and 66.75% items as A, B, and C Category items, respectively, accounting for 70.04%, 19.93%, and 10.02% of ADE of the pharmacy. VED analysis showed 12.40%, 60.16%, and 27.44% items as V, E, and D Category items, respectively, accounting for 25.05%, 66.91% and 8.04% of ADE of the pharmacy.[2]

In a study conducted in a secondary health-care center by Kant et al., the total annual expenditure on 182 drugs was Rs 6,495,785 amounting to 21% of hospital budget for the financial year 2013-2014. It is much higher than our study as it is a secondary care institute attached to AIIMS New Delhi. ABC analysis revealed 10.4%, 19.8%, and 69.8% drugs as A, B, and C Category, respectively, accounting for 69.7%, 21.2% and 9.1% of annual expenditure which is as per the ABC system of inventory management. VED analysis showed 31.9%, 53.3% and 14.8% items as V, E, and D Category, respectively, accounting for 12.1%, 84.5% and 3.4% of annual expenditure. The results are very much comparable to our study. On ABC-VED matrix analysis, 40.6%, 46.7%, and 12.7% drugs were found to be Category A, B, and C, respectively, accounting for 77%, 21.8%, and 1.2% of annual expenditure.[4]

  Conclusion Top

Category A drugs were only 8.6%. Hence, supervision of those 20 drugs would result in control of over 70% of the drug budget. In VED analysis 32% of drugs were categorized as vital and 13% as Desirable. In a resource constraint setting it is necessary that most of the budget was spent on the “vital” and “essential” category of the drugs rather than the “desirable” category. As only 0.7% of the drug budget was spent on Category C drugs, it can be said that inventory management practice was appropriate. To bring about substantial savings without affecting patient care, rational use of drugs along with restriction on nonessential drugs (Category C) and imposition of fixed budget to this category is expected.

Financial support and sponsorship


Conflicts of interest

There are no conflicts of interest.

  References Top

Dwivedi S, Kumar A, Kothiyal P. Inventory management: A tool of identifying items that need greater attention for control. Pharm Innov 2012;1:2663038.  Back to cited text no. 1
Singh S, Gupta AK, Devnani M, Latika. ABC and VED analysis of the pharmacy store of a tertiary care, Academic Institute of the Northern India to identify the categories of drugs needing strict management control. J Young Pharm 2015;7:76-80.  Back to cited text no. 2
Devnani M, Gupta A, Nigah R. ABC and VED Analysis of the pharmacy store of a tertiary care teaching, research and referral healthcare institute of India. J Young Pharm 2010;2:201-5.  Back to cited text no. 3
Kant S, Haldar P, Singh A, Kankaria A. Inventory management of drugs at a secondary level hospital associated with Ballabgarh HDSS – An experience from North India. J Young Pharm 2015;7:113-7.  Back to cited text no. 4
Kunders GD, Gopinath S, Katakam AA. Planning and Designing Supportive Services-Pharmacy. Hospitals: Planning, Design and Management. New Delhi: Tata McGraw-Hill Publishing Company Limited; 2001.  Back to cited text no. 5
Wandalkar P, Pandit PT, Zite AR. ABC and VED analysis of the drug store of a tertiary teaching hospital. Indian J Basic Appl Med Res 2013;3:126-31.  Back to cited text no. 6
World Health Organization. Introduction to Medical Equipment Inventory Management WHO Medical Device Technical Series WHO Medical Device Technical Series: To Ensure Improved Access, Quality and Use of Medical Devices Development of Medical Device Policies WHO Medical Device Technica.; 2011.  Back to cited text no. 7
Gupta R, Gupta KK, Jain BR, Garg RK. ABC and VED Analysis in medical stores inventory control. Med J Armed Forces India 2007;63:325-7.  Back to cited text no. 8
Goel S, Gupta AK, Singh A. Hospital Administration-A Problem Solving Approach. India: Elsevier; 2014.  Back to cited text no. 9


  [Figure 1], [Figure 2], [Figure 3]

  [Table 1], [Table 2], [Table 3], [Table 4]


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