MNC drug-makers allay fears of rise in prices

Multinational drug-makers have stressed that they are committed to achieving the country's healthcare goals.

Allaying fears on whether the acquisition of local pharmaceutical operations by multinational companies (MNC) would adversely impact competition and medicine prices, Mr Tapan J.Ray, Director-General of the Organisation of Pharmaceutical Producers of India (OPPI), told Business Line that competition-related issues would be taken care of by the Competition Commission of India and apprehensions of unreasonable price increases would be addressed by the National Pharmaceutical Pricing Authority, as is the current practice.

No change in pricing structure

The acquisition of Piramal Healthcare's domestic formulation brands by Abbott has not led to any change in the pricing structure, the OPPI said, giving details on behalf of its member companies.

Reiterating that the acquired products had seen an average 2 per cent increase in price, the OPPI added that many Abbott healthcare brands had seen no increases in 2011 — for example, Telpress, Stator, Sorbitrate and Valance. Also, there have been some price reductions on medicines such as Nupod and Omnacepho.

On whether specific products had seen a steep spike in price, the OPPI said the Haemaccel Urban injections' MRP in May 2010 was Rs 291 and in May 2011 it was Rs 308, indicating a 5.84 per cent increase over 12 months. As for Gardenal 60mg ( 20 tablets), the MRP in May 2010 was Rs 46.41 and in May 2011 it was Rs 51, a 9.89 increase over 12 months, it added.

Further, it pointed out, Shantha Biotech's facility produced high quality and affordable vaccines for children in India and the developing world. “Not a single vaccine is currently made or exported to the European and North American market,” the OPPI said, countering observations of local industry players.

In fact, the prices of other Shantha Biotech products, including its Hepatitis B vaccine, Interferon, etc, remained unchanged before and after the acquisition, the OPPI said.

In a separate presentation, the OPPI said that Ranbaxy was the first major Indian drug company acquired by the Japanese MNC Daiichi Sankyo in June 2008. However, two years later, the prices of Ranbaxy's medicines have remained stable, some in fact even declined. As per IMS MAT June data, prices of Ranbaxy products grew only by 0.6 per cent in 2009 and actually fell by 1 per cent in 2010, the OPPI said.

Regulatory mechanism

Pointing out that there are regulatory mechanisms in place to tackle both competition and pricing concerns, the industry body added that suggestions to limit Foreign Direct Investment in the pharmaceutical industry, when the Government is in fact debating opening up retail and the insurance sectors to foreign investments, will be a retrograde step for the country.

Further, the domestic drug market is highly fragmented and no company or group of companies enjoys a clear market domination. “In a scenario like this, the apprehension of an ‘oligopolistic market' being created through acquisitions by MNCs is indeed unfounded,” said the OPPI.

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