Drug firms split on price freeze issue

The price freeze announced by the 12 companies belonging to the Indian Pharmaceutical Alliance last week has not found favour with the rest of the industry.

Members of other industry bodies like the Indian Drug Manufacturers' Association (IDMA) and the Organisation of Pharmaceutical Producers of India (OPPI) believe that prices of drugs have not increased significantly in the recent past and hence there is no need for any public announcement of price freezes.

It is worth noting that the pharmaceutical industry has been grappling with the problem of falling prices for several years on account of the existing patent regime. As the country recognises only process patents, every drug is available under a large number of brands.

This has also caused drug companies to give huge dealer margins and bonus packs to them.

A pharmaceutical consultant, quoting an ORG-Nielson report, said prices of drugs in India actually fell in 2002 and 2003.

The Rs 2,000 crore Cipla has, in fact, cut prices of its anti-AIDS drugs along with several others in the last four year. Amar Lulla, joint managing director, said, "We have cut the price of AIDS drugs nine times in the last four years. This year alone the price of AIDS drugs has been cut by 30 per cent."

The price cut is noteworthy considering the fact that AIDS drugs constitute around 7-10 per cent of Cipla's total sales. Lulla informed the company had cut prices across a range of its products.

IDMA President Yogin Majumdar said, "Despite removing over 50 drugs from the price control list, the prices have increased only to absorb inflation. In the first two years after decontrol, prices moved up significantly in the case of some drugs but this was only because of being under artificial control for such a long time," he said.

He added that with over 550 members under its fold, IDMA would not be able to issue a notification like the IPA. "But we do believe that competition will ensure the prices will not increase for most drugs," he said.

Representatives of IDMA along with other pharmaceutical associations in the country are meeting the minister for fertilizer and chemicals, Ram Vilas Paswan, on September 23 to discuss the issues relating to price control.

IDMA has commissioned an independent market research agency to collect data on the price movement since the last DPCO issued in 1995. "We believe that price have not increased significantly and we are collecting data to prove it," Majumdar said.