Leading domestic pharmaceutical companies might be pushed Ranbaxy’s way in case unwarranted regulatory pressures are not eased on it for deciding drugs prices that are outside price control, warns a representation of The Associated Chambers of Commerce and Industry of India (ASSOCHAM), submitted to the Prime Minister.

Seeking intervention of the Prime Minister, the ASSOCHAM has urged that the PMO should advise the Ministry of Chemicals & Fertilizer to allow Pharmaceutical companies to hike the prices of non-schedule drugs by 20% each year in view of their rising input costs.

The representation has been submitted against the regulatory pressures exerted on pharmaceutical companies by concerned administrative Ministry not to hike non-schedule drugs prices by permissible limits of 20% each year, instead the cap has been brought down to 10%.

The ASSOCHAM in the interest of its constituents opposes this directive, arguing that this one step alone has made a complete mockery of setting up of Group of Ministers as it has yet to take a stand on this issue.  In the meanwhile, the Ministry issued the directive while the issue is still being examined by GoM under Chairmanship of Mr. Sharad Pawar.

The Chamber President, Mr. Sajjan Jindal said that what is even worse is that the Ministry of Chemicals and Fertilizers is threatening the industry by bringing non-scheduled drugs under price control even when there is healthy competition existing in those individual cases.  The representation further points out that if this hostile attitude of the government continues towards pharmaceutical industry, many more MNCs would devour the domestic pharma units just as Ranbaxy was recently taken over by a Japanese MNCs.

The Chamber has suggested that price increase of drugs under price control should be linked with inflation and within fixed time line of two weeks period.  Stringent actions should also be taken for schedule M compliance by all drug manufacturing companies as required by the law.  This non-compliance is leading to a flow of large scale sub-standard/spurious drugs in the country.

The Chamber is of the view that Indian pharmaceutical industry is facing major hurdles to its growth both within India and globally.  Undue regulatory pressure is further frustrating the domestic pharma to such an extent that if immediate corrective measures are not taken, many life savings drugs are likely to go out of production. It is ironic that the Indian industry which was encouraged in 1991 to meet global challenge, is today being held back from growth by our own archaic, short-sighted policies and red tape.

The price control policy, particularly for Active Pharmaceutical Ingredients (API) manufacturers for the 33 price control products has steadily declined.  The slack had been taken up by the Chinese manufacturers who were offering rock bottom prices but quality was always variable.

Recently, the Chinese government has cracked down on intermediate API manufacturers and stopped exports of those not adhering to strict pollution control norms.  Some of these industries in China have consequently shut shop and closed down.  The remaining manufacturers have jacked up the prices.  As a result, the prices of APIs like Vitamin C, B coming from China have increased by 50% in the last one year.  instead of taking cognizance of the rising prices and inflation and offering relief, the NPPA has further lowered ceiling prices of multivitamin formulations.

According to ASSOCHAM, the currency fluctuation between the dollar, rupee and Yuan have also adversely impacted raw material prices. The crude oil price increase has further adversely impacted input prices of raw materials for packaging like plastics and PET.  Raw material prices of commonly used antibiotics like Ciprofloxacin, ofloxacin and cefixime have risen by 25%.

Commonly used antiulcerants like famotidine have risen by 50%.  Prices of a large number of chemicals used in R&D have gone up.  Finally, travel costs and manpower costs have risen substantially.  In this light, a price control policy that puts a cap on even non-scheduled drugs and which does not allow price-control drugs to increase prices linked to inflation is causing severe setback. The consequent repercussions like lack of investment in new manufacturing, over dependence on China, shutting down etc. are causing loss of employment.