The move is likely to impact drug makers such as Abbott Laboratories, Ipca Laboratories, Lupin, Cadila Healthcare and GlaxoSmithKline.
Expanding the number of drugs under control, the National Pharmaceutical Pricing Authority (NPPA) has added 39 more drugs meant to treat diabetes, infections and digestive disorders to the list. The move is likely to impact drug makers such as Abbott Laboratories, Ipca Laboratories, Lupin, Cadila Healthcare and GlaxoSmithKline.
"The drugs which are put under the scanner have a market size of around Rs 1,054 crore. The reduction in the price ranges from 5-40 per cent depending upon the drug category," said Sarabjit Kour Nangra, vice-president (Research-Pharma) at Angel Broking. Stock price of these companies ended in the green or remained flat.
In May this year, NPPA had introduced cap on priced of 30 formulations, meant to cure diseases like tuberculosis, diabetes and asthma. The formula adopted for capping price of a drug is based on the average price of all drugs with a market share of over one per cent in a particular therapeutic segment. For those drugs outside the control, companies can increase prices by up to 10 per cent in a year. Price control on drugs, mandated by the 2013 Drug Price Control Order (DPCO) has not helped in improving access of these medicines in the country, a study by IMS Health, a NYSE listed healthcare information and technology services company, said early this week.
D G Shah, secretary general of the Indian Pharmaceutical Alliance said the artificial price control has introduced distortions in the pharma industry.
"Since it is more profitable to manufacture non controlled products, smaller companies are exiting controlled products. Competition is being eliminated from market. In the long run, prices will move up."