Pharma firms lose over Rs 2,000 cr on new policy

Domestic pharmaceutical market grew by 9-10% in six month period as compared to 15% growth for full year last year

The pharmaceutical industry has lost more than Rs 2,000 crore under the impact of the new Drug Price Control Order (DPCO) that came into effect in July this year, according to the Indian Drug Manufacturers Association (IDMA).

The National Pharmaceutical Pricing Authority (NPPA) has so far notified the new ceiling on prices of over 150 essential drugs out of the over 340 medicines that were brought under the DPCO. Industry estimates put a  20 per cent cut in prices of drugs under the new pricing policy.

IDMA secretary general Daara B Patel in an interaction with the media on Thursday said in addition to the impact on margins, the uncertainty caused by the delay in announcing the new pricing policy had also contributed to the lower growth in domestic business in the first six months of this financial year.

The domestic pharmaceutical market grew 9-10 per cent in the six-month period as compared with a 15 per cent growth for the full year last year and any recovery to the last year's level is unlikely as the industry has already lost six months, according to him. The value of domestic pharmaceutical market in India is currently estimated at over Rs 75,000 crore.

“I consider this as a temporary phase. It will take a year or two to get back the stability in the domestic market,” Patel said while supporting the government's new policy with regard to the pricing of essential drugs.

On the export front, the rupee depreciation has largely worked in favour of the sector reflecting in a 25 per cent growth during the same period, according to the industry body. This is good news considering that there was just a 10.55 per cent growth in exports at $14.6 billion last year as compared with a 23 per cent growth achieved in the previous year, according to the Pharmaceutical Export Promotion Council (Pharmexcil).

But the import of intermediaries used in formulations manufacturing, which according to IDMA stands at 35 per cent of the total requirement, was also getting costlier due to currency fluctuations, IDMA vice president S V Veerramani said. He said there had been a 15 per cent increase in input costs in recent times adding to the pressure on the margin front.

They said encouraging R&D, providing capital subsidies and infrastructure by the government were necessary to overcome the current challenges. Countries like Bangladesh are emerging as low-cost pharmaceutical centres with the backing of their respective governments and this could pose a problem for Indian exports in the long- run.

At least 1,000 new pharmaceutical exporters will emerge in the country if the government's scheme for upgradation of the small pharmaceutical units to the international standards will start rolling. About Rs 500 crore is available under a special fund created by the government this year and the scheme is almost on the anvil, according to Patel.

The fourth edition of ‘Pharmac India’, an exhibition of pharma machinery, equipment, bulk drugs, was inaugurated in Hyderabad on Thursday.