The Central Government has decided not to allow monopoly trade in the drugs and pharmaceuticals segment in the country. The government has declared that no sole selling agents can be appointed by any pharmaceutical company for sale of bulk drugs or formulations for three years. The decision covers all bulk drugs, drugs and formulations defined in the Drugs Price Control Order 1995.
According to a notification dated February 23, 2004 from the Department of Company Affairs, Ministry of Finance, "The demand for the category of goods is substantially in excess of the production or supply of such goods and that the services of the sole selling agents will not be necessary to create a market for such goods". The notification has exempted all drugs categorized under alternative systems like Ayurveda, Siddha, Unani (Tibb), and Homoeopathy from the above decision.
The notification is to affect the bulk drug companies who have sole marketing agents in the country. Monopoly of the import and marketing of bulk drugs in the country will have to be stopped. With the notification in place the pharmaceutical companies will not be allowed to entertain single marketing agents. Same is the case with domestic bulk drug companies who prefer sole marketing agents for sale of their products in the country.
However, the government decision is likely to have minimal effect on formulation manufacturers. Welcoming the decision, drugs trade sector said that the government directive was in the interest of the consumer to make available abundant supply of medicines in the country. They pointed out that the trade was also against any kind of monopoly in the drugs segment.
None of the major drug companies are known to have given sole rights to their clearing and forwarding agents for any particular region. It is known that the C&F contract itself clearly mentions the right of the company to appoint more agents in any territory if deemed necessary. According to trade sources, the notification would now make it mandatory for companies to have such a clause incorporated in their C&F contracts, if they have not been doing so previously.