The Hindu Business Line : Same drugs with multiple price prints?

CONSUMERS may find several strips of the same tablet but with different prices printed on them, despite being from the same company, said a pharma analyst on the current pricing confusion in the industry.

The analyst's remark is not directed at the recent announcement of a 4-per cent value added tax (VAT) on medicines but is about how this announcement will combine with another development that took place earlier this month.

The pharmaceutical industry had all along asked for a 4-per cent VAT. But the industry's joy is muted, despite the announcement being along expected lines. And the cause for discontent is the Centre's announcement that excise duty on finished medicines will be calculated on the maximum retail price (MRP), rather than on the ex-factory price.

A representative with a domestic drug company said stocks worth about Rs 1,000 crore were already in the inventory.

The price on one set of medicine packs is the old price, prior to the MRP-based excise announcement. Following the announcement, pharma companies have to print another price on its medicines.

If the Union Budget next month brings in more changes, then a third price will have to be printed, even as the previous stocks circulate in the market. And finally, when and if VAT gets implemented in April, another set of prices will have to printed on the medicine packs, the representative said.

In all, a drug company may have to change the price on its packaging around four times, if the Government does not keep its MRP-related announcement in abeyance till later, the industry representative said.

To prevent this from happening, the pharma industry is not going ahead with re-packaging.

According to a drug manufacturer, the trade will simply return the medicine stocks to the company in the face of any confusion. And the company will be obliged to take back the stocks, as it does with expired medicines, he said.

VAT at 4 per cent would have spelt good news for consumers, as they could have expected a reduction in medicine prices. But will that hold, given the current situation? It will depend on how individual pharma companies balance out the benefits of VAT against the burden of the MRP-based excise duty, a representative with a multinational drug company said.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page