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Monday, May 31, 2004

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Drug industry keeps fingers crossed on pricing policy

P.T. Jyothi Datta

Mumbai , May 30

AS the new Government's Common Minimum Programme (CMP) gradually plays itself out - the mention of the P-word with regard to health has fuelled the pharma industry's fears on drug pricing.

The issue evokes intense emotion, leading players in the estimated Rs 35,000-crore pharma industry to plead for a "realistic view" on drug pricing.

"The CMP has talked of reviewing the revival of public sector units for the manufacture of critical bulk drugs to bring down and keep a check on the price of drugs. PSUs have played a significant role in spurring entrepreneurs in the domestic pharma industry, besides helping them become self-reliant. But they have been rendered unviable because, among other things, they were forced to maintain prices on bulk drugs. This, even as competitors made more contemporary drugs and ploughed back revenues into improving their performance. Prices can be effectively kept in check by competition and controls will only result in less funds being available to invest in research," industry representatives told Business Line.

Citing an ORG study, another representative points out: "At an overall industry level: price decline among products that are not under price control is around 0.5 per cent compared to a price hike of 2.1 per cent in the controlled basket. Besides, in the top 300 brands that are not under price control, the price decline is to the tune of 3.5 per cent, compared to the price decline of 1.5 per cent seen in drugs under price control."

Illustrating price behaviour in the recently introduced medicines that are not under price control, industry representatives said: "Lovastatin (for lowering cholesterol) was introduced in 1995 by Ranbaxy at an introductory price of Rs 173. There are about 18 competitors in the segment, including Dr Reddy's, Sun Pharma and Cadila Pharma. And in 2003, the Ranbaxy drug sold at about Rs 41. Similarly, Clopidogrel (that prevents blood from clotting) introduced by Sun Pharma in 1998 at Rs 199 dipped to Rs 48 in 2003. About 18 other companies compete in this segment too."

The pharma industry, however, is not jumping the gun and landing up in the corridors of the powers that be, at least not just yet. "The industry has in the past made presentations on how drug prices have been effectively kept in check by competition. With the new Drug Price Control Order still under the purview of the apex court, pharma industry representatives have decided to wait by the sidelines as the CMP gradually unravels itself."

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