Price caps on drugs hurt Indian units of global pharma firms

Tuesday, July 22, 2014

Mumbai: India’s widening of price controls to drugs with revenues of about $915 million adds pressure on the local units of global manufacturers to boost sales volumes. India capped prices of 50 diabetes and heart treatments last week, with limits possible for other medications too. Paris-based Sanofi SA’s Indian business is worst hit based on maximum retail prices and would have lost Rs.139 crore of sales in the past year under the curbs, market researcher AIOCD AWACS estimates. “Multinationals will have to go for volumes,” said Sarabjit Kour Nangra, an analyst at Angel Broking Ltd in Mumbai. “Their pricing is out of sync. Product differentiation in a market that’s generic is very low.” The curbs are the first on treatments outside a list of drugs deemed essential in India, where companies such as Novartis AG and Pfizer Inc. have had patents challenged as the government seeks affordability. The National Pharmaceutical Pricing Authority signalled on 10 July it may add caps on cancer, HIV, tuberculosis, malaria, asthma and vaccine treatments. “The 50 molecules initially targeted by the regulator have sales of Rs.5,500 crore or 6% of India’s drugs market,” Nomura Holdings Inc. said 13 July, citing AIOCD AWACS data. Analysts Saion Mukherjee and Lalit Kumar said while the earnings impact may not be large, there’s a risk of more controls.

Source: Livemint (link opens in a new window)

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