The new Drug Price Control Order (DPCO) which is enforced from May 15 is seen as a double edged sword. While it may reduce the prices of many of 348 essential drugs covering over 600 formulations may benefit patients, it is seen to dampen the growth prospects of multinational companies in the country.
There is an air of despondency among the global pharma majors which are likely to withdraw some drugs coming under the ambit of the new DPCO.
The MNCs are already apprehensive after the Supreme Court verdict over the patentability of Novartis’ incrementally improved version of a cancer treatment drug Glivec and the new DPCO has given yet another shock.
From 2008 to 2012 many top-selling drugs lost to patent expiries losing over $100 billion in sales to become generic. The year 2013 is critical for MNCs when revenues losses of $29 billion are expected because for more patent expiries, according to the Global Lifesciences outlook by Deloitte.
“Now the current scenario has clearly indicated financial pressure on blockbuster drugs, cut down on R&D investments and now with the new DPCO we are in a slush,” said an official on condition of anonymity.
Karnataka is home to four multinational companies namely Allergan, AstraZeneca, Novo Nordisk, Lundbeck. The industry at large were in a consensus that the NPPP or the new DPCO order which is a lengthy, complex and wordy presentation which needs to be interpret cautiously.
The long pending order on drug pricing has come through and we appreciate the government for its efforts. But the fear is that many of the formulations coming under the new DPCO will go out of manufacturing and there is every possibility that MNCs will be first to take a call on this. The stoppage of production of 348 drugs may not be resorted to by the small and medium enterprises as that will hamper their growth prospects, said Kaushik Desai, immediate past chairman, Industrial Pharmacy Division, Indian Pharmaceutical Association (IPA).
After being at disadvantage for a very long time, this DPCO will partly bring some relief to Indian pharmaceutical companies. Government should actively make provisions to give some advantage in pricing and priority in institutions to the domestic pharmaceutical companies which will truly drive the growth of indigenous industry. Fundamentally, price controls are always counter-productive to innovation and research which are bases for the growth of any industry. So, instead of bringing more products in the ambit of price control, government should develop mechanisms to adopt chronic diseases like cancer, diabetes and Alzheimer’s as seen in other developing countries. In a vast economy like India, the cost of this adoption would be a small cost to the government, said Rakesh Bamzai, president, marketing, Biocon Limited.
“The impact on the pharmaceuticals industry revenues may be felt in the 12-18 months. After that, the product portfolio will evolve to overcome the dip in the revenue. For consumer this pricing policy would help, to some extent. Overall this is a solution which the Industry and Government can live with as opposed to the alternative price control formulas based on costs,”said Sujay Shetty, Leader Pharma Life Sciences, PwC India.
The market based pricing model used to fix the final price based on the average of the three brands that have one percent of the market share is the big disaster said Dilip Surana, managing director, Micro Labs in an earlier interaction with Pharmabiz.
“We need to deliberate a lot on this confusing, draconian policy which may prove catastrophic. A time limit of 45 days is not a pragmatic approach at all. How can they expect companies to print and distribute price lists to six lakh chemists in the country,” asked SG Biligiri, president, Karnataka Pharmaceutical & Drug Manufacturers Association (KDPMA) and technical director, Juggat Pharma. “Many points need to be clarified and we are currently not able to comment until we go through the same in detail,” he added.
According to Jatish N Seth, vice chairman, Confederation of Indian Pharmaceutical Industry (CIPI), member, KDPMA and director, Srushti Pharmaceuticals, the 67 page new DPCO looks to support the patients which is a positive and constructive move by the government. But from the point of view of the industry, there is need for detailed interpretation and in depth discussion with the KDPMA and CIPI.
The new DPCO is a positive move and good for the common man who can now afford many of these drugs , stated V Harikrishnan, president, Bangalore District Chemists and Druggists Association (BDCDA).
RS Thakur, president of Federation of Indian Pharmacist Organisations (FIPO) commented notification of new DPCO is a welcome move as prices of 270 medicines will fall by 20 per cent, HIV drugs by 70 per cent and a few other drugs by 88 per cent. Government must be conscious about quality by ensuring mandatory testing of each batch of all products within a month of entering into market.
N Anandan, secretary, TN Chemists and Druggists Association (TNCDA) said, “As per the New DPCO 2013 our retailers trade margin for scheduled drugs will be reduced to three per cent. Previously retainers are getting on selling price. Now it is on purchase price. Also due to shifting from decontrolled to controlled items retainers margin will be reduced by four per cent. Total around seven per cent margin reduced. We welcome price reduction to consumers but opposing our reduction of margin.”