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As the pharma industry gears up to raise its concern against the recent move by the government to bring more drugs under the ambit of price control, industry insiders including associations that represent big pharma are unanimous in saying that such a move is sure to kill the small and medium pharma manufacturer in the long run and result in an increased dependence on multinationals and big pharma for medicines.
Major industry associations like the Indian Pharmaceutical Alliance (IPA) and the Organization of Pharmaceutical Producers of India (OPPI) have already made representations to the ministry of health, while the Indian Drug Manufacturers' Association (IDMA) is planning to do the same in around a week's time.
D G Shah, secretary general of the IPA which has Torrent Pharmaceuticals, Alembic Pharmaceuticals, Cadila Healthcare, Cadila Pharmaceuticals, Glenmark, Lupin, Intas and several other big pharma as its members, said that while multinational drug firms as well as large Indian companies will lower prices, it would push the SMEs to take a price cut too in order to stay competitive. However, "They would find it difficult to lower their prices further and would thus become victims of the price fixation orders compressing the band width of prices," he said.
"The National Pharmaceutical Pricing Authority (NPPA) has fixed the prices of anti-diabetic & cardiovascular in respect of 108 non-scheduled formulation packs under Paragraph 19 of DPCO, 2013," NPPA said in a notification recently.
The NPPA's notification extends beyond the mandate of DPCO 2013. It has been less than a year since the new DPCO which fixed prices of 652 drugs under the National List of Essential Medicines (NLEM).
The IPA has noted in its memorandum to the ministry that, "As the companies in the highest price bracket having volume share of about 30 per cent are forced to reduce their prices, they will compete in the mid-segment forcing companies in this segment to lower their prices to protect their volume share of about 40 per cent. Their lowering the prices will have direct impact on the lowest segment with volume share of 30 per cent. They mainly comprise of SMEs. They would find it difficult to lower their prices further." Terming the new move as 'anti-competitive', it said that the compression of the band width would hurt the SMEs the most in the medium term (three to five years).
"It will also eliminate or reduce the competitive pressure they exert on the high and mid priced segments and will lead to increasing dependence on the MNCs," the IPA said.
Chirag Doshi, chairman of the Gujarat State Board of the IDMA, which largely represents SMEs said that while SMEs will try to move away from DPCO drugs, focussing more on cosmoceuticals and neutraceuticals, they would be short of working capital to invest in diversifying the product portfolio. Moreover, this would further impact their investments on quality control initiatives, he added. A senior official of a Gujarat-based bulk drug and formulation maker alleged that in the long run, the MNCs would be in a position to dictate the pricing in the drug market, as consumers would prefer to buy branded drugs at similar rates as that of Indian makers.
