The National Pharmaceutical Pricing Authority (NPPA) has withdrawn guidelines for price control of 108 formulations, which was issued under Para, 19 of the drug prices control order (DPCO). NPPA had capped prices of 108 cardiac and diabetes drugs on July 10,2014. Invoking Para, 19 of DPCO, NPPA had extended price control to drugs outside of national list of essential medicines (NLEM). Pharmaceuticals lobbies had contested NPPA order in Bombay High Court.
The notification to fix prices of these medicines, which are non-scheduled formulations, was issued wherever the maximum retail price (MRP) of the brand of a particular formulation exceeds 25% of the simple average price, the same will be capped at the 25% level. Simply put, if the price of a drug brand exceeds the simple average price in that therapy group by 25%, or the price at which a new drug is launched for the first time is higher than the most expensive brand existing in the group, NPPA would initiate the process of fixing a price cap.
The drugs that were covered were Gliclazide, Glimepiride, Sitagliptin, Voglibose, Amlodipine, Telmisartan and Rosuvastatin, Heparin and Ramipril, covering an estimated market of around Rs 55 billion. These drugs had witnessed a price reduction from 10-15% to as high as 35%, with the average reduction around 12%.
Commenting on the same, Sarabjit Kour Nangra, VP Research, IT, Angel Broking, said, ''The biggest positive impact will be felt for companies like Sanofi (Rs 1.39 billion gain), Zydus Cadila (Rs 400 million gain), Ranbaxy (Rs 380 million gain), Cipla (Rs 190 million gain), Lupin (Rs 320 million gain) , DRL (Rs 140 million gain in sales) and Sun Pharma (Rs 250 million gain in sales), on the basis of AIOCD AWACS. Thus, amongst the domestic and MNC player, the latter would be impacted the most positively, as they mostly price their products much higher than the competition and then derive their 100% of the sales from domestic markets.
The domestic companies not having very huge exposure to the domestic market, will be insulated to a large extent, as the pricing is not the key growth driver for their growth. Their products are therefore competitively priced. Thus, we maintain our recommendations in the sector.''
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