The just-notified new drug price control policy will negatively impact sales and margins of pharmaceutical firms in India, according to industry players.
“At a company level, we were aware of the upcoming policy and have factored in the impact which is likely to be in the range of 3-4 per cent of our finished dosage sales in India. We have plans in place to ride over this impact,” Dr Reddy's laboratories Vice-Chairman and MD Satish Reddy said.
The Department of Pharmaceuticals had notified the Drugs (Prices Control) Order 2013 on Wednesday under which prices of 348 medicines in the National list of Essential Medicines (NlEM) have been brought under price control, thus replacing an earlier order of 1995 that regulated prices of only 74 bulk drugs.
Expressing similar views, Industry body Organisation of Pharmaceutical Producers of India (OPPI) Director General Tapan J Ray said: “Immediate adverse impact of DPCO 2013 on both sales and margin of OPPI member companies will be very significant.”
However, a change from cost-based to market-based pricing methodology is expected to have some transparency and be directionally more prudent to the pharmaceutical industry, on a longer term perspective, he added.
OPPI represents research based international and large pharma companies in India.
According to IMS Health, a provider of information, services and technology for the healthcare industry around the world, the DPCO 2013 will lead to the value erosion of the Indian pharmaceuticals market.