Updated on 14 January 2013
Having the same views, the industry expert said that due to competition many of the biologicals are already priced quite low, so the impact of drug pricing policy will not make much difference to Indian biological manufacturing companies.
On the contrary, sharing her views Dr Kiran Mazumdar-Shaw, chairman and managing director, Biocon, asserted, "The new Price ceiling order that NPPA has issued, has one price for indigenous manufacturers and one for multinationals (MNCs) and importers which is at a 20-40 percent premium. It is clearly pro MNC's who get to enjoy better margins than domestic players. Domestic players like Wockhardt and Biocon have been instrumental in bringing down the cost of insulins for the patients, however it's the MNC's who are being favored by the government."
Continuing, Ms Shaw pointed out that the MNC's (in case of insulin market) are well entrenched players with almost 80 percent market share in India. It is incorrect to assume that lower price will boost volumes, as it is not an over-the-counter product but a prescription product, where doctors make the decision and not the patients. Secondly and more importantly, MNCs, are using their price advantage to support aggressive marketing initiatives including free distribution of devices.
She further said, "We have been requesting the government to provide a level playing field for all players in the market, domestic as well as MNCs, and do away with a dual pricing mechanism for insulins. We have suggested to have a common ceiling price for insulin products to ensure affordability for the patients. This new ruling with two ceiling prices one for domestic product and the other for imported ones defies the purpose and fails to address the basic issue raised a few years ago. No country favors foreign companies and puts domestic companies at a commercial disadvantage. This is against national interest and implies that government would prefer to import insulin rather than manufacture it in the country which suggests that Biocon should shut shop in Bangalore and import from its Malaysian plant. We will be approaching the Prime Minister's Office, concerned ministries and the NPPA to have them correct this anomaly."
Welcoming the government's move to make essential drugs more affordable and accessible to the society, Mr Arun Sawhney, chairman, National Committee on Pharmaceuticals, Confederation of Indian Industries (CII) said, "The new policy recommends a shift from cost-based to market-based pricing which is a fair approach and it will help improve the availability of essential medicines. While the industry welcomes this move, it would also be pertinent to note that the proposed policy will expand the span of price control to around 30 percent of the domestic pharmaceutical market and impact revenues of the industry which is already facing increased input costs, inflation and a variety of regulatory challenges."
All India Drug Action Network (AIDAN), an independent network of several non-government organizations (NGOs) has challenged the cabinet approval of drug price controls based on market-based pricing at the Supreme Court, which has deferred the case for hearing on December 12, as government of India is seeking time so that it can place the drug pricing policy before the Supreme Court. It may be noted that AIADN besides other NGOs has been working hard to increase access and improve the rational use of essential medicines, for which the government has plans in place to start an initiative for free supply of essential medicines in public health facilities in the country aiming to provide affordable health care to the people by reducing out of pocket expenses of medicines.