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As the domestic pharma industry receives a bolt from the blue with 108 more drugs coming under price control as per the latest notification of the National Pharmaceutical Pricing Authority (NPPA), small scale manufacturers say that they are increasingly shifting their focus to nutraceuticals and exports.
What is more significant is that industry insiders fear that production of these essential drugs could also come down as SMEs are unlikely to continue contract manufacturing of these medicines under severe margin squeeze. At least three small scale drug manufacturers based in Gujarat and Hyderabad said on grounds of anonymity that as manufacturing of these drugs would not remain viable, several SMEs may cut down on contract manufacturing for big pharma and focus on developing portfolio in nutraceuticals, herbals and cosmoceutical space.
“In the long run, such a move cannot benefit the common man,” says an Ahmedabad-based manufacturer of drugs whose company has already forayed into the cosmoceutical space. “Several big pharma get drugs contract manufactured from SMEs, many of which are based in Gujarat. However, as the margins keep getting thinner, SMEs are slowly loosing interest in manufacturing these drugs,” he claims hinting at a possible production cut of essential medicines in the long run.
Chirag Doshi, chairman of the Gujarat State Board of the Indian Drug Manufacturers Association (IDMA) said that the association was indeed planning to take a representation to the NPPA on the matter. “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.
Even analysts point out that this is a rare invocation of a lesser-used provision in the Drug Price Control Order (DPCO). “NPPA has fixed the prices of 108 formulation packs of 50 anti-diabetic and cardiovascular medicines. What makes the development significant is that NPPA has fixed prices of those medicines which are not listed under the national list of essential medicines (NLEM). Prices of 652 drugs under NLEM were fixed by the government last year under DPCO 2013,” said Sarabjit Kaur Nangra, vice president, research, pharmaceuticals, Angel Broking.
The drugs that will become cheaper include Gliclazide, Glimepiride, Sitagliptin, Voglibose, Amlodipine, Telmisartan and Rosuvastatin, Heparin and Ramipril. “With this list, the total market of cardiac medicines under price control, including the earlier ones, stands at 58 per cent, while 21 per cent of the anti-diabetic market comes under the purview. It is estimated that around Rs 5,500cr of the pharma market will be impacted, with the range of prices being reduced from 10-15 per cent to as high as 35 per cent, with the average reduction around 12 per cent,” she said.
SMEs have already started shifting focus to exports, diversifying to non-DPCO products especially nutraceuticals and even ayurvedic products, Doshi pointed out. “In the last six months, several companies in the state have moved towards manufacturing nutraceutical and cosmoceutical products as the segment is immune from price control,” he said. Industry insiders feel at least 10-15 per cent companies have started work on diversifying their portfolio after the DPCO 2013 came into effect. There are around 681 registered ayurvedic manufacturers in the state, as against 2047 allopathic units, informed the Gujarat Food and Drug Control Administration (FDCA).
Margins in nutraceutical and ayurvedic segments are around 30-35 per cent, said Kamlesh Patel, chairman and managing director of West Coast Pharmaceuticals. His company has launched at least 45-50 products in the nutraceutical space in the last six months, mainly in the areas of women care, child care apart from hair care and skin care products. In comparison, the turnover from the DPCO segment has been reduced in the range of 25-75 per cent depending on each company’s portfolio. Margins too are under pressure, claimed Doshi.
