Govt to seek further classification of 'branded generics'

To thrash out the issue of whether "branded generics" will come under the trade margin agreement or not, the government will soon instruct the industry to classify branded generics drugs (off-patent drugs sold under brand names and promoted through chemists) as either "generics generics" or "branded drugs".

Branded generics constitute 7-8 per cent while generics generics (drugs sold under their chemical names and promoted through chemists) account for roughly one per cent of the Rs 35,000 crore domestic pharma market.

While there is consensus among the industry and the ministry of chemicals and fertilisers on capping margins on generics generics at 15 per cent for wholesalers and 35 per cent for retailers, branded drugs have a 10 and 20 per cent margin cap for wholesalers and retailers, respectively.

"Branded generics is a grey area with no legal definition and is liable to different interpretations, making enforceability a problem. The ministry, however, feels that it should come under trade discipline of some kind and will urge the industry to voluntarily classify these drugs as 'generics generics' or 'branded'," said a ministry official.

This implies that either the 15-35 per cent margin caps or the 10-20 per cent caps will become binding.

The 14-member committee, set up by Minister for Chemicals and Petrochemicals Ram Vilas Paswan to sort out the ticklish issues in the National Pharmaceutical Policy will discuss this proposal at its September 20 meeting in Mumbai.

The ministry and the industry are not yet clear about the definition of drugs that would qualify for the 15-35 per cent margin cut agreement, though both parties vehemently denied the possibility of the agreement falling apart.

"There is no confusion but a dialogue is on about how to define these things. One should not preempt the outcome when the discussions are still on," said Ranjit Shahani, president, Organisation of Pharmaceutical Producers of India.

Another industry representative said the "talk of discussions falling apart was baseless" and even though there were issues, there were no disagreements between the government and the industry.