The recommendations will be sent to the Cabinet within a week for approval to bring drugs in the National List of Essential Medicines (NLEM), with total sales of around Rs29,000 crore, or about 60% of the domestic market, under control.
The high-level group of ministers (GoM) mandated with formulation of the New Pharmaceutical Pricing Policy (NPPP) on Thursday proposed to bring the prices of 348 essential drugs and their formulations under government control, up from 74 at present.
The GoM has also discarded the cost-based formula, and the ceiling price will now be determined by using the weighted average price (WAP) of brands with over 1% market share by volume.
The recommendations will be sent to the Cabinet within a week for approval to bring drugs in the National List of Essential Medicines (NLEM), with total sales of around Rs29,000 crore, or about 60% of the domestic market, under control.
“We have finalised everything today. Now it will go to the Cabinet and the Cabinet will take the final view. We will send it in a week’s time,” agriculture minister Sharad Pawar, who heads the GoM, said after the meeting.
The decision, however, has not gone well with the Indian pharmaceutical industry.
According to DG Shah, secretary general, Indian Pharmaceutical Alliance, companies will suffer almost 15-17% revenue loss due to the new policy. “It will hurt the pharma companies in the short-term, but hopefully, the players will make it up by volume growth. It will ensure both availability and access of pharmaceutical products in the market,” he said.
Tapan J Ray, director general, Organisation of Pharmaceutical Producers of India (OPPI), said the new proposal will have adverse impact on the industry. “The span of price control will now cover around 30% of the Indian pharmaceutical market with further squeeze in the margin,” he said.
Though not a good sign for large multinational companies (MNCs) in general, Bhavin Shah, pharma analyst, Dolat Capital, feels they will be impacted only with respect to the specific molecules being brought under the purview.
“The impact will be on a case-to-case basis. Having said that, prices will undergo correction if the companies are selling the drugs at a higher price. The new policy as such will not prove detrimental to domestic players to a significant extent though,” he said.
Ranjit Shahani, president, OPPI, concurred. “A market-based policy is a balanced formula and will help improve the availability of essential medicines for patients,” he said.
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