Prices not cut for lack of uniform norms: drug majors

Prices not cut for lack of uniform norms: drug majors

New Delhi: A day ahead of the second meeting of a group of Union ministers finalizing a national pharmaceuticals policy, large Indian drug makers have blamed the absence of uniform pricing guidelines in the industry for their inability to reduce prices of medicines that they volunteered for cuts in November.

Eleven of India’s larger drug makers had proposed cuts ranging from 0.2% to 74% on 886 drugs, in return for softer control by the ministry of chemicals and fertilizers, which is the administrative ministry for the sector.

This promise, made in good faith, the drug manufacturers said, is being held against them at a time when their smaller rivals continue to charge higher prices and hand out large margins to retailers as an incentive to push sales of their products.

Two surveys by the government in the last few months found that just about half of the 886 drugs saw price cuts in the so-called ‘generic-generic’ drugs, which are medicines that are copies of off-patent drugs.

Large companies, including market leaders Cipla Ltd, Ranbaxy Laboratories Ltd and Lupin Ltd, were in effect blamed for not making the price reductions.

“The (retail) trade has so many options. Why should they push our drugs, on which we are giving lower margins to enforce price cuts, when another manufacturer is giving older higher margins?" said an executive of a leading drug maker who didn’t want to be named.

Unlike branded drugs, which are promoted through the doctors, generic-generic drugs are promoted through the drug trade, by wholesale and retail margins that are sometimes as high as 1,000%. These drugs are commonly used as anti-bacterial, anti-fungal and pain management medicines, and vitamins.

“We were the first company to keep our word and reduce the prices on all our drugs. But we had made a presentation to (the ministry) in December last year to show that the demand for our products was falling," said Swati Piramal, director of strategic alliances and communications, Nicholas Piramal India Ltd.

A group of ministers, headed by agriculture minister Sharad Pawar, meets for a second time on Wednesday. It will try and finalize a policy that the pharmaceutical industry is bitterly opposed to, given the tight cost-based pricing proposals in it.