National Pharma Pricing Policy Market based pricing :: Centrum

National Pharma Pricing Policy

Market based pricing

Drug pricing is a very complex and sensitive issue as it affects the masses. The Government aims to improve the availability of essential drugs at affordable prices and has plans to increase the number of drugs from 76 in DPCO to 348 under NPPP. This would increase the span of price control from ~25% to over 60% of drugs. The policy has suggested market based pricing mechanism from the currently used cost based pricing mechanism to arrive at a ceiling price. This would simplify the process and make it more transparent. However, there is stiff opposition from the NGOs and traders to the new pricing mechanism. The policy is under discussion among the Group of Ministers (GoM) and will be presented in the Parliament for discussion and approval.

m  NPPP has recommended exemption of products with price of

m  Traders are likely to lose more than manufacturers due to increase in products under price control from 76 to 348 and margins will also get lowered. Moreover, the price of leader brands is likely to reduce leading to lower margin for the trade.

m  Among the listed companies Ranbaxy Labs, Novartis, Zydus Cadila and Dr. Reddy’s Labs are likely to be adversely affected. Among unlisted companies, Alkem, Mankind, Abbott Healthcare and Emcure are likely to get affected due to the provisions of NPPP.

m  Among listed companies Merck, Sanofi Aventis and J.B. Chemicals are likely to benefit. Among the unlisted companies, Cadila Pharma, Apex, Blue Cross and Anglo French are likely to benefit.

m  The effect of proposed NPPP would be around 2.8% at PBT level to the pharma industry. The effect on top 20 selected pharma companies would be 3.2% at PBT level. We will come out with a detailed update once the policy is approved by the Parliament.

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