Pharmaceutical companies like Ranbaxy Laboratories, Sanofi India and others fume at price control order

MUMBAI: The drug price regulator’s move to control the prices of more commonly used diabetes and heart disease medicines has made pharmaceutical companies furious, as they fear it would wipe out their margins just when they seemed to recover from the previous government’s decision to slash the prices of more than 300 drugs.

On Friday, the National Pharmaceutical Pricing Authority ( NPPA) slashed the prices of 108 brands under a provision of the Drug Pricing Control Order that allows the government to fix the maximum retail price of any drug under extraordinary circumstances.

The NPPA has identified more drugs used in the treatment of cancer, HIV and AIDS, TB, malaria, cardiovascular diseases, diabetics and asthma as well as vaccines for possible price controls.

In its notification announcing the price controls, the NPPA said different brands of same drug formulations, including the offpatent drugs, vary disproportionately in terms of price, indicating “a severe market failure”.

French drug maker Sanofi will take the most painful hit from the price cut. Its Indian unit will see a loss of Rs 139 crore, or about 30%, in its sales from cardiovascular and diabetes drugs, according to analysis done by the All India Organisation of Chemists and Druggists.

On Monday, Sanofi India’s shares dropped as much as 15% during intraday trade, before closing 10% lower at Rs 2,900. “The NPPA has shocked and disappointed the pharmaceutical industry by issuing a price control order … without any consultation and participative dialogue with any industry associations”, said Shailesh Ayyangar, managing director of Sanofi India.

Ayyangar said the recent notification has shaken the confidence of the industry. It is an incorrect assumption on part of the drug regulator that pharma companies indulge in exploitative pricing, he said, responding to an email query from ET.

The product categories considered for price control have about 30-70 brand options each across price ranges for physicians and patients to choose from, he said.

“Therefore, the premise that products are not accessible due to affordability is misplaced.”

Other companies that are hit by this order are Zydus Cadila, Ranbaxy Laboratories, Emcure Pharmaceuticals and the local unit of Abbott.

Sun Pharmaceutical Industries, which owns Ranbaxy, and Zydus Cadila refused to comment.