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Insulin now a sweet deal for MNCs

Thursday, 22 November 2012 - 7:21am IST | Place: Bangalore | Agency: dna

Imported brands get Rs55/pack advantage in diabetes drugs market; local firms plan action.

The government’s intent was to do a favour to diabetics by capping insulin prices.
But, somewhere along the line, this week’s new pricing policy of the National Pharmaceutical Pricing Authority (NPPA, which, in July, had turned down drug-makers’ requests for an insulin price rise) ended up extending a favour to foreign drug-makers as well, besides creating a disparity between them and local companies.

Insulin brands produced domestically now face a price ceiling of Rs145; but for imported brands, the limit is Rs200 per packet – that is, a cool Rs55-per-pack advantage in the Rs1, 140-crore insulin market in India.

C M Gulhati, editor of reference journal Monthly Index of Medical Specialties (MIMS), decried the new policy. “It is usually the raw materials that companies import. Such a demarcation will lead to greater imports of raw material. It is unjust and ridiculous.”

Despite this new price cap, foreign drug-makers will continue to dominate the market. For instance, Danish firm Novo Nordisk commands a 58% share; French company Sanofi Aventis and US-based Eli Lilly both enjoy 14%.

In contrast, Indian firms such as Biocon and Wockhardt hold roughly 10% and 4%, with their sales around Rs114 crore and Rs45 crore, respectively.

The edge foreign companies have could affect domestic players’ margins, experts said. Insulin as a product category fetches margins of about 10-14%. For multinationals, the margins are a bit higher, said analysts.

Not everyone agrees though. Ranjit Kapadia, senior vice-president, Centrum Broking, for one, said multinationals, unlike Indian companies, pay customs duty on their imports and have to contend with forex fluctuations as well.

Another analyst, however, argued that there should be a common platform for all players. “MNCs have an edge already despite their costlier products. Why should the government favour them for the same product?”

A Biocon official said the new upper limits will not impact the company much, given its cost-based pricing that factors in manufacturing and packaging costs, and is almost in the NPPA-prescribed bracket. “Insulin is a product which gets a lot of attention from the government. Drug-makers have not been too liberal on insulin pricing anyway.”

The domestic firms plan to approach the Prime Minister’s Office against the “unfair” order of the NPPA, which is under the Ministry of Chemicals and Fertilisers.


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