Hospital stocks fall up to 6%: Apollo, Fortis, KIMS tumble as SC questions drug mark-ups

Shares of major hospital chains came under heavy selling pressure on Wednesday, with Apollo Hospitals, Fortis Healthcare and Krishna Institute of Medical Sciences (KIMS) falling up to 6% after the Supreme Court raised concerns over steep mark-ups on medicines sold through corporate hospitals.

Apollo Hospitals Enterprise shares were down 5.95% at Rs 8,184.50, while Fortis Healthcare fell 5.03% to Rs 777.80. KIMS declined 5.70% to Rs 726.20, while Aster DM Quality Care was down 4.26% at Rs 703.95. The broader healthcare sector was also under pressure, with the Nifty Pharma index down 1.77%. The BSE Healthcare index was down 2.19%.

The sell-off came after the Supreme Court raised concerns over the wide gap between the price at which hospitals procure medicines and the maximum retail price charged to patients.


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SC questions 10x mark-up on cancer drug

The Supreme Court questioned a cancer drug that was supplied to retailers for Rs 2,700 but carried an MRP of Rs 27,000, effectively a tenfold difference.

“This is carnage. Plain and simple. The cancer drug is priced at an MRP of Rs 27,000 despite being supplied to retailers for Rs 2,700,” a bench of Justices Vikram Nath and Sandeep Mehta told Solicitor General Tushar Mehta.

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The court also asked the Centre to examine whether a uniform 16% margin should apply to all medicines.

“Why this distinction? Essential or non-essential does not matter? Why not keep a 16% margin on MRP of everything?” Justice Mehta said.

The court said such pricing practices could put a burden on patients and taxpayers, particularly when treatment is covered under government schemes. It also questioned hospitals that require patients to purchase medicines from their own pharmacies.

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Hospital pharmacy practice in focus

The bench questioned who benefits from the high mark-ups and said it would examine the issue in detail.

“Corporate hospitals are industries. It is not a service at all. Why should the common man suffer all this?” the bench said.

The Supreme Court was hearing petitions concerning medicine pricing, generic prescriptions and medical device controls under the Drugs (Prices Control) Order, 2013. The Solicitor General said the issue required attention and sought two weeks to examine it.

The court also raised questions over the difference in prices between medicines sold without combinations and those sold with combinations. The matter has put the pricing practices of corporate hospitals under greater scrutiny.


Disclaimer: This article has been written by Sakshi Kumari, who is not a SEBI-registered Research Analyst or an Investment Adviser. Sakshi Kumari and her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here