Cutting Expiry Losses at Your Medical Store

Every chemist knows the carton. It sits under the counter or in the back room, full of strips and bottles that crossed their expiry date while nobody was looking: a scheme purchase that never sold, a cough syrup bought for a monsoon that came late, a slow-moving brand one doctor stopped writing. When I sit with pharmacy owners in Navi Mumbai to plan their stock systems, that carton is usually the first thing they show me, and the last thing anyone has put a number on.

This guide answers one question: how do you cut expiry losses at your medical store? It covers buying, shelving, billing, near-expiry reports, returns under the May 2025 CDSCO guidance, disposal and software. I write as the founder of Infoways, a Navi Mumbai software company that builds stock, ordering and prescription systems for pharmacies. The process comes first; the software only makes it stick.

1. How do you reduce expiry losses in a pharmacy?

You reduce expiry losses in a pharmacy by controlling four things: how much you buy, which batch leaves the shelf first, how early you spot stock that will not sell in time, and how quickly you send expired stock back for credit. Most stores lose money on all four at once, which is why the carton keeps filling.

Name the cause before you pick a fix. In the stores we work with, the same four patterns keep coming up.

Source: Infoways’ experience setting up stock systems for chemists. The AIOCD, the national chemists’ body, also told pharma companies in a January 2021 letter that large shipper packs increase expiry at the trade level (AIOCD letter).

Put a number on the carton before you change anything. Add up last quarter’s expired stock at purchase rate, and the value of expiry claims still pending with distributors. Those two figures are your baseline. Everything below is about making them smaller.

2. How do you set up first-expiry-first-out (FEFO) shelving?

First-expiry-first-out (FEFO) means the batch with the nearest expiry date is sold first, whatever order it arrived in. On the shelf, that means the shortest-dated strips sit in front or on the left, and new stock always goes behind. It sounds obvious; it breaks every time a busy counter boy unpacks a delivery by pushing it to the front.

FEFO differs from first-in-first-out: today’s delivery can expire sooner than last month’s. The rule is the date on the strip, never the date it arrived.

A shelving routine that survives a busy counter

1. When a delivery arrives, the person unpacking checks the expiry on each item against what is already on the shelf before placing it.
2. Shortest expiry goes in front (or on the left for drawers). Newer stock goes behind. Never mix two batches loosely in one box.
3. Mark the expiry month in large figures on the box front with a marker, so staff do not have to turn the strip over to read tiny print.
4. Keep a single “60-day shelf” or tray for anything expiring within two months, so it is visible to the pharmacist and the manager.
5. Do a ten-minute shelf walk once a week, one rack at a time, rather than a full stock check twice a year.

Cold-chain items such as insulin deserve their own check. The CDSCO guidance lists cold-chain products that were not stored in the cold chain among drugs to be treated as unusable, expired or not (CDSCO guidance, May 2025). FEFO in the fridge matters as much as on the shelf, because a fridge is where old stock hides best.

3. Why batch-wise billing matters more than the shelf

Batch-wise billing means every sale records which batch was sold, so your stock count is right by batch and expiry, not just by product. Without it, the system says you have 40 strips of an antacid; with it, the system knows 25 expire in March and 15 in November, and can tell staff which to pick.

Shelving depends on people remembering. Batch billing lets the software remind them: when the billing screen suggests the earliest-expiring batch by default, the counter boy who grabbed the wrong strip gets a prompt before the bill is printed.

Batch billing also helped stores through the GST change of 22 September 2025, when the rate on most medicines was cut from 12 to 5 per cent and old-MRP and new-MRP stock sat side by side (Lakshmikumaran & Sridharan). A store that tracked batches could bill each at its own MRP and rate. A store that did not had to sort it out by hand.

One warning from our set-ups: batch billing only works if purchases are entered by batch. A distributor bill entered as “100 strips” without batch and expiry makes every report downstream wrong.

See also: Deciding whether to stay with your billing package or add your own system on top? Read custom software vs off-the-shelf.

4. Which near-expiry reports should a chemist check, and when?

A chemist should check a near-expiry list in three windows, 90, 60 and 30 days before expiry, and take a different action in each. At 90 days you still have choices. At 30 days you mostly have a return to file.

Source: windows and actions are Infoways’ working practice with pharmacy clients. Separate storage of expired drugs at retail outlets is required under Rule 65(17) of the Drugs Rules, 1945, as cited in the CDSCO guidance (May 2025).

A word on prescription items, because I see this mistake in marketing advice aimed at chemists. You cannot advertise or push prescription medicines to clear near-expiry stock, and you should not try. A patient takes what the doctor prescribed, in the quantity prescribed. For those items, the only levers are upstream: buy less, move stock to where it sells, and return it in time.

There is a patient-care angle too. A patient on a 90-day course should not receive strips expiring next month, so the near-expiry flag should also stop short-dated stock going to delivery orders.

5. How do you return expired medicines to the distributor?

Expired medicines go back up the chain they came down: from the retailer to the supplier (stockist or distributor) and on to the manufacturer. CDSCO guidance circulated to state drug controllers on 26 May 2025 says the retail licensee is responsible for returning stock to the supplier or manufacturer within 30 days after expiry and for keeping a register of expired drugs.

The guidance (document WI/01/DCC-P-25) also says each wholesale level should accept expired stock from those it supplied and pass it on within a further 30 days, and that manufacturers should accept all expired or unused drugs and ensure none stays in the supply chain more than six months after expiry (CDSCO; Down to Earth report, June 2025). The covering letter asks states to “encourage” stakeholders to adopt it, so treat it as the regulator’s recommended practice and check with your state drugs control office how strictly it is enforced locally.

The register CDSCO suggests

Annexure A of the guidance lists the columns for the record a retailer, wholesaler or hospital keeps. It maps neatly onto a software screen, which is why we build it that way.

Source: CDSCO, Guidance Document on Disposal of Expired/Unused Drugs, WI/01/DCC-P-25, Annexure A, circulated 26 May 2025.

Getting the credit, not just sending the carton

Sending stock back is half the job. The money comes back as a credit note, and that is where most stores leak. How a return is billed under GST is set out in CBIC Circular 72/46/2018-GST of 26 October 2018: either the return is treated as a fresh supply on an invoice, or the goods go back on a delivery challan and the supplier issues a credit note (GST Council copy of the circular). Which route your distributor uses, and what it means for your input tax credit, is a question for your CA.

Settlement terms are trade practice, not law, and they vary by company and distributor. For a sense of what chemists consider fair: in a January 2021 letter to pharma companies, the AIOCD asked for uniform settlement of leakage, breakage and expiry claims, credit notes within 60 days of receiving the goods, and no zero-value credit notes (AIOCD letter). That was a trade body’s demand, not a rule. Ask each distributor for its current return window and settlement time in writing, and keep it on file.

What we build for this is a claims list by distributor: date sent, value at purchase rate, date credited. Anything older than the agreed settlement time turns red, so nobody forgets to call.

6. How should a medical store dispose of expired medicines?

A medical store should not throw expired medicines in the dustbin. The CDSCO guidance expects them to be returned to the supplier; only if the supplier or manufacturer is not accessible should the retailer dispose of them under the Biomedical Waste Management Rules, 2016, through the proper channel, and keep records open to the drugs inspector.

In practice, for a retail chemist, that usually means a biomedical waste agency authorised in your area, but confirm the route with your state drugs control office and pollution control board before you rely on it. The guidance also covers how to hold the stock until it leaves:

• Collect expired and unused drugs in yellow, non-chlorinated plastic bags or containers, stored in a separate area.
• Keep cytotoxic (anti-cancer) drugs apart from other expired stock, in a designated secure place.
• Store controlled substances that have expired separately and securely so they cannot leak back into circulation.
• Keep the disposal record, and the disposal certificate where you get one, ready for inspection.

Patients also ask what to do with medicines left over at home. The guidance says consumers are not part of the trade return chain, and suggests that state drugs control departments and chemists’ associations jointly set up “drug take-back” sites. Kerala’s programme, reported as running since December 2024, is one example (Down to Earth). If your local association runs one, tell patients; if not, do not accept household medicines into your own stock or returns.

The guidance includes a short “flush list” (Annexure D) of medicines that it says households may flush to prevent accidental harm. That list is meant for patients at home, not for a store clearing its expired carton. Stores should follow the return route.

7. How do you set reorder levels from sales data?

Set a reorder level for each item from what you actually sell in a typical month, plus a small buffer for the distributor’s delivery time. Order up to a maximum that you can sell well before expiry, and ignore scheme slabs that push you past it.

Made-up numbers to show the method: an antacid sells 30 strips a month, the distributor delivers in two days, and you want a week’s cushion. The reorder level is roughly 10 strips and the maximum about 45, one and a half months of sale. A “buy 100, get 10 free” scheme means more than three months of stock; if the batch is short-dated, the free strips can cost more in expiry than they save.

Source: illustrative bands from Infoways’ work with pharmacy clients. Adjust to your own sales history, distributor frequency and shelf life.

Your chronic patients are your best forecast: a refill register tells you base demand for regular medicines without guessing.

See also: Keeping those regular patients is its own job. Read how local chemists compete with online pharmacy apps.

8. What should pharmacy billing software do for expiry management?

Pharmacy billing software should record every purchase and sale by batch and expiry, suggest the earliest-expiring batch at billing, show near-expiry stock in 30, 60 and 90-day windows, block short-dated stock from delivery orders, keep the expiry return register and track credit notes until they arrive.

Most established pharmacy billing packages in India already handle batch and expiry. The difference is in the details, so test with your own data. These are the tests I would run.

Source: Infoways’ checklist for pharmacy software evaluations. Features change; confirm each with the vendor in a live demo.

If your billing package passes most of these, keep it and fix the process around it. Where we usually add value is around the billing package rather than inside it: an owner’s view of near-expiry stock across branches, a claims tracker that chases distributors, a refill register that feeds reorder levels, and a delivery flow that refuses short-dated stock. Our pharmacy page shows how those pieces fit together.

Where this advice breaks down

Some expiry loss is out of your hands. A distributor can supply short-dated stock, a doctor can switch brands overnight, and a manufacturer can recall a batch. FEFO and reorder levels will not prevent those; they only stop you adding to them.

The CDSCO guidance is guidance. The covering letter asks states to encourage its adoption; it is not a new rule in the Drugs Rules, and states may apply it differently. If your distributor’s practice differs from the 30-day pattern, talk to them and your local drugs control office rather than assuming either side is wrong.

Distributor return terms are commercial, and no software changes them; it only gives you dates and amounts when you negotiate. The GST treatment of returns and write-offs is technical, so ask your CA before changing how returns are billed.

Finally, a very small store may not need any of the software. A careful owner with one counter, a marker pen, a monthly shelf walk and a paper claims register can keep expiry low. Software earns its place when you have more staff, more branches or more stock than one person can watch.

Your expiry checklist

Do this for three months and compare the carton under the counter with the one you started with. That difference is money you used to throw away.