The small scale drug manufacturers have taken serious objection to the assurance given by the Indian Drugs Manufacturers Association and Organization of Pharmaceutical Producers of India to Ram Vilas Paswan, the union minister of chemicals & fertilizers, for bringing down the prices of generic medicines as it could prove disastrous for the manufacturers and the traders.

The manufacturers have been maintaining clear cut terms and written agreements with the trade on margins and any attempts to change the rhythm might upset the industry. A section of the industry cannot decide on the margins, as the prevailing common agreements are to offer 20 percent to the retailer and 10 percent to the wholesalers. The associations commitment to bring down the prices means upsetting the prevailing agreements without consulting the various stakeholders involved, noted T S Jaishankar, chairman of the Confederation of Indian Pharmaceutical Industries (CIPI), the apex organization of various state level SSI pharmaceutical organisation in the country.

He further noted it was wrong to assume the industry was reaping huge profits as highlighted by a section of the media and the minister. Apart from the trader's margins, the industry has to shelve another 5 to 7 per cent margins for the super stockiest and C&F agents. Besides, the industry has to undertake promotional activities of the medicines. Unlike other products, the industry cannot advertise its products and thus has to set up a dedicated distribution chain.

For this, the companies have to earmark at least 15 per cent to conduct promotion cum distribution schemes on its own or through the traders. While fixing the price of drugs, the industry has to consider all these chain of manufacturing-distribution process and some margin has to be ensured for the various levels of stakeholders involved. Therefore it was wrong on the part of the minister to assume the industry was making a drug at Rs 2 and selling it for Rs 20 and so on.

Nevertheless, it was a welcome move on the part of the minister to allow the industry to self regulate the prices of medicines. Whenever, new medicines come into the market, competitors will come out with other brands and thus the market forces will determine and bring down the prices of medicines, noted Jaishankar.

He noted that apart from CIPI, which vehemently opposed the move at the meeting, the Indian Pharmaceutical Alliance (IPA) also had not agreed to the IDMA-OPPI suggestions on lowering of generic prices.