NEW DELHI/MUMBAI, JUNE 14: There is good news for medicine buyers. The National Pharmaceutical Pricing Authority (NPPA) has slashed prices of 34 formulations - including widely used formulations like Paracetamol and Ibobrufen - ranging from 1.9 per cent to 77 per cent and fixed prices for two other formulations. However, the profit margins of major pharma companies are likely to come under pressure following the downward revision in the prices.Important formulations which would be less expensive with the price changes include Paracetamol, Ibobrufen, Pseudophedrine, Bromohexine, Acetaminphen, Menthol, Citrazine, Cynacobalomin, Thaimaine HCL, Nocotinamide, Pyridoxine HCL, Benzyl Alcohol, Tripolidine and Solvin. The new prices would come into effect within 15 days.However, the price changes decided by the government on a suo motu basis are expected to affect the revenue flow of major companies such as E Merck, Glenmark, Nicholas Piramal, Cipla, Sun Pharma, Cadila, Wockhardt, Knoll Pharma, Hoechst Marrion, Rhone Poulenc and so on.While prices for two formulations have been fixed for the first time, in the case of 34 drugs prices have been slashed by 1.89 per cent to 79.64 per cent, an officials release said. Non-ceiling prices have been fixed for 36 packs in accordance with the provisions of the Drugs and Price Control Order, 1995.The formulations for which prices have been revised are multi-vitamin injections, anti-tussives and anti-allergic formulations based on bulk drug Psuedoephedrine HCL combination with other drugs. The revision in prices has been necessitated due to decrease in the bulk drug prices, the release said.According to sources in the drug industry, E Merck will be a mjor loser as prices of many of its products - especially vitamin products - have been pruned. ``Hoechst Marrion, the major producer of Ibobrufen, will lose revenue following the reduction in the prices. As paracetamol is produced by several leading companies, their revenue will be affected to that extent,'' said an industry source.Rhone Poulenc will be hit by the cut in Citrazine prices. ``In fact this is the first time in the last a few years that NPPA slashed the prices of several widely used drugs. This may even upset the financial calculations of some companies,'' said an analyst with a reasearch firm.As the NPPA price revision came out after the stock market closed, share prices of major companies were unaffected. However, industry pundits don't rule out a setback in pharma shares in the coming days.Industry sources also said many pharma companies had recently gained from price revisions. Glaxo India is expected to garner net gains of roughly Rs 12-15 crore following the hike in prices of its betamethasone range of products by the NPPA recently.Officials of pharma companies were critical of the current mechanism of NPPA controlling the prices of drugs. While industry is of the view that competitive forces (there are 23,000 manufacturers accounting for a turnover of Rs 10,000 crore) are the best regulator of prices, the government has yet to endorse that line, in toto.``Companies have shied away from investment in and the production of drugs under price control eg. doxycycline, chlorpropamide etc. resulting in shortage or non-availability of these drugs or increased reliance on imports. This void has in turn attracted unscrupulous traders and manufacturers who offer spurious and substandard drugs. There is also a shift to newer drugs which are outside price control, resulting in the use of more potent medicines than needed. Hence, the cost of treatment to the consumer has gone up several fold,'' said an industry spokesman.``Price controls, in my opinion, have not only led to irrational use of drugs and promoted spurious and substandard drugs, but the consumer has also ended up paying more than what he would have in the case of conventional drugs,'' he said.
