Drug price cuts to hurt MNCs most
The bottom-lines of multinational pharmaceutical companies will get hit more than that of Indian pharma companies if the government were to enforce a further reduction in few essential drugs.
By Narayan Bhatt, TNN |
AHMEDABAD: The bottom-lines of multinational pharmaceutical companies will get hit more than that of Indian pharma companies if the government were to enforce a further reduction in few essential drugs.
The Rs 25,000-crore domestic pharma industry is highly fragmented. While the major Indian pharma companies have a significant part of their total sales coming from exports, MNCs derive nearly 100% of their turnover from domestic markets.
The National Pharmaceutical Pricing Authority (NPPA) and the industry have submitted their proposals to the government and it is likely that by the end of this month the Union Cabinet may take a final decision.
“While the NPPA has proposed a rollback as well as a 10% price cut, the pharma industry has proposed that a lower cut of 5% be affected,” says an official of the Indian Pharmaceutical Alliance, which represents the biggest pharma companies in the country.
There are an estimated 241 specified formulations out of 663 national essential medicines where a price reduction may take place. About 192 out of 354 bulk drugs under price control may also witness a cut in prices.
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Ranbaxy Laboratories, the biggest pharma company in India derives in excess of 75% of its turnover from international operations. “We are also the number one player in the domestic markets. However, a price cut will relatively have a less impact when compared to others." The industry has jointly agreed to a 5% cut in prices. The government should consider that the essential medicines in the market are currently affordable, safe and efficacious.
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