Indian Pharmaceutical Alliance will be commencing talks soon with All India Organisation of Chemists and Druggists and some of the other wholesale and retail trade bodies to bring in a rationalization of retail trade margins particularly in generic drugs.
The IPA decision is in the wake of determination of the union minister of chemicals Ramvilas Paswan, to control the drug prices to make them affordable to the general public. IPA along with the CEOs of all the eleven member companies, who met the minister, is learnt to have promised the minister that they were willing to talk to the traders to bring down the trade margin to the stipulated level of 15 to 20 per cent.
IPA has already offered a price freezing till March 31, 2005, in the meeting to convince the minister that increasing the span of price control would result into shortage of products and also discourage investment of research oriented companies to into R&D. However, as the minister has indicated that there were certain drugs on which the manufacturers are offering very high trade margins that are ultimately slapped on the customer, the IPA companies are seriously considering a roll back of such trade margins.
"We are trying to solve the issue with a bilateral talk with the traders to pass on the benefit to the customer," said Habil Khorakiwala, CMD, Wokhardt Limited, a leading member in the IPA.
According to DG Shah, secretary general, IPA, the Association has convinced the minister that instead of taking a decision which will impact the growth of the industry as a whole, the government should initiate an appropriate move by identifying the particular segment where a control is necessary.
The decision of the pharmaceutical majors has come in the wake of Paswan's firm decision to reduce the prices of drugs in the larger interest of the consumer. The delegation is learnt to have conveyed the apprehensions of the industry with regard to the plans to increase the span of price control to the minister.
It is learnt that the minister, in his meeting with the IPA, had mentioned about the higher trade margins offered by the companies for several products including the brands of nimesulide, omeprazole, ciprofloxacin etc. It is to be noted that Ranbaxy, the largest Indian pharma company and a member of IPA, offers 74 per cent return on investment (ROI) on its brand Cifran to the traders.