The hype over open market sales of generic swine flu drug Tamiflu (oseltamivir) notwithstanding, manufacturers would have us believe the margins are far from exciting.
“There are not much margins in this product. It should be a maximum of about 4%,” says P Bhaskara Narayana, director and CFO of Hyderabad-based Natco Pharma.
One of six pharma companies to have received government approval to sell the drug in the open market, Natco has already readied about 1.25 lakh doses (each comprising 10 capsules) and expects to sell one million doses by October end.
Hitherto, Hetero Drugs, also Hyderabad-based, was the lone supplier of oseltamivir to the government, at Rs 275 for 10 capsules. The same company has now priced the drug at Rs 450 for 10 capsules for the open market.
Natco, on the other hand, has priced its oseltamivir product, Natflu, at Rs 480 for 10 capsules. And though Narayana declined to quantify the market opportunity, sources said the all-India market for the drug, going by the number of infected persons and the plan to use the drug for prophylaxis, would be about Rs 1 crore per day.
How is it then that the players are claiming such low margins?
The companies cite cost heads ranging from inputs to packaging to distribution.
Notably, oseltamivir has been categorised as a Schedule X drug by the government. Only those with Schedule X licence can sell the drug, and only on prescription.
In fact, the prescription has to be carried in duplicate by the patients —- one to be retained by the druggist and the other by the patient, duly endorsed by the druggist. Identifying outlets which have the licence and establishing the distribution and
sales channel are thus huge challenges.
Natco has so far tied up with around 35 outlets in Hyderabad, including 25 Medplus outlets. Of over 100 stores of Medplus in the city, only about 25 have the Schedule X licence. The chain also has nearly 400 stores across Karnataka, Tamil Nadu and Maharashtra, but these are yet to secure the licence.
“In the next few days, we should have more stores with Schedule X licence. The process of securing these licences is on,” Narayana said.
“There is an additional packaging cost for us compared to the competition. We are giving the capsules in a container unlike in a blister pack of our competition. That is adding to the cost,” Narayana said.
Natco will sell the drug in three dosages —- 75 mg, 45 mg and 30 mg. The dosage varies based on the patient’s age and body weight. “For now, these capsules can also be used for children. But, we are working on launching a syrup form for children shortly,” said Narayana.
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