Pharmaceutical policy in India is perceived as an industrial policy rather than health policy. The formulation of pharmaceutical policy, therefore, has traditionally been the responsibility of the Department of Petrochemicals in the central Ministry of Chemicals and Fertilizers, with only limited input being provided by the Ministry of Health and the Bureau of Industrial Costs and Prices (BICP) of the Ministry of Industry.
govt-may-bring-in-new-curbs-on-drug-prices-this-month
https://timesofindia.indiatimes.com/business/india-business/govt-may-bring-in-new-curbs-on-drug-prices-this-month/articleshow/64432770.cms
the strategies and policy instruments used by the Indian government to achieve these objectives have changed radically in each of three phases: 1947-1969, 1970-1990 and 1991-present. The period between 1947 to 1969 was characterized by minimal government regulations, during which the multinational corporations (MNCs) dominated the sector. The second period, between 1970 and 1990 was a period of intense government regulatory oversight, with the MNCs being a particular target of the regulation. A number of public corporations also sprang up during this time. The 1990s, on the other hand, were a period that witnessed a substantial relaxation of government controls over the pharmaceutical industry
In the 1994-95 NDP, the functions of the Ministries involved in the pharmaceutical sector were redefined. Price controls were significantly scaled back. MNCs were provided substantial concessions in equity ownership, in the production and licensing of drugs, in drug imports and exports, and in the profit margins that firms could retain. A product patents-based intellectual property (IPR) regime (instead of a process patent regime) was also promulgated, which will come into force in 2006, as a direct outcome of India's signing the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement. However, no new health-oriented measures to promote the availability, affordability, quality, and rational use of drugs were outlined in the new drug policy. Very significantly, an initial proposal to set up an independent National Drug Control Agency to monitor and control pharmaceutical quality assurance was ultimately given up. Nor did the new drug policy outline any strategies to improve compliance with existing laws and regulations, of which there are many.
In India, the pharmaceutical sector is affected by a complex variety of laws and policy instruments. Not all of these regulations, however, form part of the National Drug Policies (NDPs) that have been promulgated from time to time by the Ministry of Petroleum and Chemicals. In addition to the national drug policies, the Drug Price Control Orders (DPCOs), the National Industrial Policies, the Foreign Exchange Regulation Act (FERA), and the Indian Patents Act (IPA) also have an impact on the pharmaceutical industry.
Thankfully the penetration of third party payers in Indian health industry
Impact on Prices The prices of drugs in India have increased since the promulgation of the 1994-95 policy, although the price increases are not as extreme as portrayed in several academic and media reports in India (e.g. Rane, 1993, Bidwai, 1995). A detailed study by an independent market research group in India showed that, in a 12-month post-DPCO (1995) period, the index of pharmaceutical prices (Base: 100 in January, 1995) had gone up to 102.6 for formulations under price control, to 106.3 for decontrolled formulations, and 104.6 for all formulations (ORG, 1996). In other words, there had been a 4.6% increase in drug prices in the 12 months following the announcement of the 1995 DPCO, compared to an increase in the Consumer Price Index (CPI) of 9.8% for the same period. The study also showed that the index of prices on products that had moved from the controlled to the decontrolled category under the DPCO was 110.7 (i.e., a 10.7% increase). Of the 6495 products surveyed by ORG, 32% showed an increase in price, with 7.6% showing an increase in excess of 25%. 15% of the surveyed products registered a decrease in price, and the price of 53% of the products remained unchanged (ORG, 1996). Impact on Profitability The profitability of the MNCs in India has improved significantly, since the announcement of the 1994-95 drug policy. An annual survey of its member-companies by the organization of multinational drug companies in India (OPPI), which is based on the Annual Reports published by these firms, showed that the profitability of these companies 16 had increased substantially between 1993-94 and 1994-95. A summary of the profitability figures from these companies, between 1990-91 and 1994-95, are shown in Table 10. Table 10: Profitability of OPPI Member-Companies 1990-91 1991-92 1992-93 1993-94 1994-95 Total Profit Before Tax (PBT) as % of Total Net 5.1 5.3 5.2 7.8 9.9 Sales__ _ _ _ _ __ _ _ _ _ PBT on Total Pharmaceutical Sales (domestic + exports) as % of Total Net Sales of 3.3 2.6 2.9 5.2 6.3 D rugs__ _ _ _ __ _ _ _ _ _ _ _ _ _ PBT on Domestic Pharmaceutical Sales as % of 2.0 1.0 2.6 4.4 6.1 Domestic Net Sales of Drugs Source: OPPI, Annual Report, 1995-96. Table 11 shows the trends in profits before taxes, as a share of total sales, for several major pharmaceutical companies (both domestic and multinational) in India for the Table 11: Trends in Profits as a % of Sales for Major Pharmaceutical_Companies Year/Company 95 96 7 8 Cipla 17% 17% 28% 27% Dr Reddy's Laboratories Ltd. 24% 28% 20% 21% E Merck India Ltd. 19% 18% 18% 18% Glaxo Ltd. 14% 15% 15% 16% Hoecht Marion Roussel Ltd. 14% 14% 15% 14% IPCA Laboratories Ltd. 15% 14% 14% 14% Knoll Pharmaceuticals Ltd. 14% 17% 18% 19% Kopran Ltd. 18% 19% 20% 17% Lupin Labs Ltd. 12% 16% 12% 14% Nicholas Piramal India Ltd. 30% 30% 23% 19% arke Davis India Ltd. 12% 16% 14% 13% Pfizer Ltd. 11% 15% 15% 13% Ranbaxy Laboratories Ltd. 27% 26% 5% 24% Rhone Poulenc India Ltd. 7% 22% 24% 14% SmithKline Beecham Pharmaceuticals Ltd. 14% 14% 21% 13% Sun Pharmaceuticals Industries Ltd. 27% 36% 32% 24% Wockhardt Ltd. 38% 32% 27% 21% Source: Compiled from data provided in the Probity Sector Report: Pharmaceuticals, 1999 period 1995 to 1998. The figures show that the Indian domestic companies had a higher profit to sales ratio compared to the multinational firms.However, the multinational companies are better off compared to the domestic firms in terms of profit as a percentage of capital deployed. The difference between the two groups of companies probably reflects the differences in levels of efficiency, the use of technology, and the portfolio of products (Table 12). 17 Table 12: Trends in Profit as a % of Capital for Major Pharmaceutical Companies Year/Company 95 96 97 98 Cipla 25% 20% 42% 36% Dr Reddy's Laboratories Ltd. 19% 19% 14% 17% E Merck India Ltd. 37% 38% 36% 41% Glaxo Ltd. 45% 37% 35% 36% Hoechst Marion Roussel Ltd. 20% 22% 24% 25% IPCA Laboratories Ltd. 22% 17% 18% 17% Knoll Pharmaceuticals Ltd. 50% 64% 48% 42% Kopran Ltd. 16% 18% 18% 16% Lupin Labs Ltd. 9% 14% 12% 13% Nicholas Piramal India Ltd. 17% 17% 23% 15% Parke Davis India Ltd. 45% 67% 32% 24% Pfizer Ltd. 33% 47% 26% 36% Ranbaxy Laboratories Ltd. 18% 18% 17% 18% Rhone Poulenc India Ltd. 8% 28% 29% 17% SmithKline Beecham Pharmaceuticals Ltd. 34% 36% 43% 35% Sun Pharmaceuticals Industries Ltd. 21% 27% 29% 23% Wockhardt Ltd. 13% 13% 12% 10% Source: Compiled from data provided in the Probity Sector Report: Pharmaceuticals, 1999. Note: Indicator calculated as the ratio of profit (before Interest, depreciation and tax) divided by total capital deployed. The variation between the two tables can be possibly explained by the fact that the multinationals are presently dependent on their high volume low margin drugs (several of their older drugs are covered under DPCO). They are not making large investments (hence their capital deployed is low) and are waiting for 2005 to get in a big way. The Indian manufacturers, on the other hand, are consolidating their positions and developing their all-round capabilities in order to be able to compete with the global industry when WTO rules come into force
No comments:
Post a Comment