Pharma industry views the recent price cut on 52 drugs by the National Pricing Pharmaceutical Association (NPPA) as an opportunity to chart strategies for growth because the market demands wide range of drugs. They also see that the price reduction would expand contract manufacturing business.

According to Sunil Attavar, secretary, Karnataka Drugs and Pharmaceutical Manufacturers Association, price control in pharma is a reality. “We have to live with it and succeed in this environment. While it is not just the NPPA order, but we are putting up with the ban of fixed dose combinations(FDCs), besides surprise inspection checks and keep pace with constant consumer expectations besides a new NLEM is expected before this fiscal. The big advantage currently is the huge market opportunity. Last month, the industry registered a 13 per cent growth which is a boost for companies”, he said.

“Therefore industry views price cuts with a positive frame of mind. The sector is upbeat in its efforts to build brands, tap niche markets, and look at new opportunities like nutraceutical, dietary supplements and novel drug delivery systems”, he added.

According to Kaushik Desai, pharma consultant, Hon General Secretary, Indian Pharmaceutical Association and Chairperson, Industrial Pharmacy Section, Federation of Asian Pharmaceutical Associations (FAPA), since this price cut affects not just domestic companies but large multinationals too, contract manufacturers stand to gain momentum.

“The large players will now look to offload their drugs under NLEM to be manufactured by GMP compliant facilities.  This will provide a fillip to the small and medium enterprises which have quality compliant production plants,” he added.

From a government perspective drug price cuts are to achieve 3As: affordability, availability and accessibility. But on the contrary, the apprehension is that frequent price cuts should not lead to drug shortage as it will impact the quality of patient life, which is a serious issue. In order to ensure that this does not happen, it is high time that the SMEs approach the large players and display their production prowess and grab contract manufacturing orders, said Desai.

First and foremost, the government should give an opportunity to the industry for a face- to- face dialogue to comprehend the drug pricing strategy. There is considerable science and mathematics that goes drug pricing. There are factors like fixed and variable costs, besides aspects like investments into R&D, target group of patients and their willingness to pay. In addition to this, cost of production and distribution is taken into account after which companies then decide on a markup for profit to come in the final pricing decision, said Archana Dubey Mitra, vice president, Exports, Bal Pharma.

Going by NPPA’s moves so far, prices are slashed at random making survival for many companies difficult, she said .

The industry is now sore with the government that it was not taken into consideration before it embarked on such drastic steps. Out of the 236 companies in the state, over 80 per cent are loan licensee manufactures and are hoping that contract manufacture assignments would increase.