The Hindu Business Line : Pharma cos seek Govt nod to hike prices

Mumbai, July 27 Medicine shortages could be round the corner if the Centre does not step in and stem the combined effects of rising input prices, shortage of raw material from China and inflation, say representatives from the estimated Rs 68,000-crore pharmaceutical industry.

Seeking a remedy, drug makers are knocking at the Government’s door, some asking for permission to raise prices by 20 per cent, while others seek a more simplified procedure to increase prices for only those medicines that are badly impacted by rising costs and raw material shortages.

Between April and June this year, the price of one kg of painkiller paracetamol increased from Rs 135 to Rs 330; antibacterial Levofloxacin, from Rs 2,400 to Rs 3,450; anti-inflammation drug Ibuprofen, from Rs 380 to Rs 650; and antibacterial Gentamycin, from Rs 4,500 to Rs 6,700, said the Indian Drug Manufacturers’ Association (IDMA).

This increase does not translate into the retail price at which consumers buy, says IDMA’s Mr Daara Patel, as the quantity of active ingredient used in different medicines varies on their potency. Companies are relying on stocks in their inventory, but if the situation continues, shortages will become a reality, he says.

The Indian Pharmaceutical Alliance’s Mr D.G. Shah agrees that drug companies may be forced to curtail production due to the non-availability of raw materials, resulting in shortages.

The shortage of bulk ingredients from China has resulted from the closure of manufacturing units on environmental grounds in the run-up to the Olympics, a drug industry representative said. And this has affected the production of several drugs, he added.

Ipca Laboratories, for instance, relies on its captive pharmaceutical ingredients for production. But it is feeling the pinch on anti-malarial chloroquinine, says Ipca’s Executive Director (Finance), Mr A.K. Jain. Chloroquinine has been affected by the increasing price of raw material imports from China. But as this drug is under price control, Ipca is unable to increase its price in the local market.

The price of the anti-malarial drug’s input material, phosphorus oxychloride, has gone up from Rs 40 to Rs 240 a kg, says Mr Jain. “We have approached the National Pharmaceutical Pricing Authority seeking permission to revise the prices,” he told Business Line.

At present, drug companies need to make individual applications to the Government before increasing prices. But this is cumbersome, company officials say. “Suffocated” by the limited elbow-room, they are calling for simpler procedures to show trade-level price increase, and the subsequent retail-level hike. The last purchase invoice against the latest invoice should illustrate the increase, suggests an industry official.

Recently, IDMA’s Mr B.N. Singh urged the Centre to allow companies to increase prices up to 20 per cent, against the present cap of 10 per cent. If drug-makers have to take the entire hit of the rising input costs, some may stop making those medicines and that could cause shortages, he told representatives of the apex Chemicals and Fertilizers Ministry.