Generics market may lose value on margin cut

NEW DELHI: The proposed trade margin cut on generic drugs from October 2 is set to be applicable to 2,000 brands of specified strengths, and as a result the over Rs 1,500-crore generics drug market would shrink by a third in value.

An average price fall of 30% and a maximum of up to 75% will be applicable to a wide range of medicines including antibiotics amoxicillin, ciprofloxacin, ofloxacin and ceftriaxone, hypertension and angina drug atenolol, anti-fungal drug fluconazole, pain killer diclofenac sodium, anti-anxiety drug alprazolam, erectile dysfunction drug sildenafil citrate, allergy drug cetrizine and anti-inflammatory drug nimesulide.

Chemicals and fertilisers minister Ram Vilas Paswan told ET that his ministry has already received a list of 1,000 formulation packs and that a similar list is expected in the next couple of days. Thirty-five companies of the Indian Drug Manufacturers’ Association (IDMA) and four Indian Pharmaceutical Alliance (IPA) companies including Ranbaxy, Unichem and Alembic have given their list.

IDMA companies have given the names of 208 products. The same medicine comes in different strengths and quantities in different formulation packs and therefore the retail formulation pack count is significantly high.

“At any point of time, a company would be selling generic generic drugs in the range of 5-100 packs,” said a senior industry official.

Though the margin cut is voluntary, some prominent companies have expressed apprehensions of not having a level playing field. “It will be unfair to the willing companies when those who are not part of any industry body do not feel compelled to bring margins down. The government has to ensure that the cut is implemented across-the-board.

While it need not be notified, the government could bring in some guidelines in this regard,” said an industry representative.