* Move will cut prices of costly brands
* Policy to cover up to 30 pct of India's drug market
* Govt adopts market-based price regulation
NEW DELHI/MUMBAI, Nov 22 India approved a new
drug pricing policy designed to increase the number of drugs
deemed essential that are subject to price caps, two ministers
The move will curtail prices of costly brands sold by
domestic and international drugmakers in a market that already
has rock-bottom medicine prices, meaning analysts and industry
officials are sceptical about the benefits of the policy.
The prices of 348 drugs deemed essential will now be
regulated, compared with 74 previously.
Valued nearly $13 billion, India's domestic drug market is
the fourth-largest in the world by volume. U.S.-based Abbott
Laboratories has the largest market share followed by
India's Cipla and Sun Pharmaceutical Industries
The new policy is expected to cover up to 30 percent of the
total drugs sold in the country, according to industry reports.
"Generics in India are available at the cheapest prices in
the whole world. So by doing this, the government is not going
to achieve much more," said Ameet Hariani, managing partner at
Hariani & Co, a Mumbai-based law firm that advises key
drugmakers and large companies.
Price regulation makes sense in case of drugs where there is
a monopoly or a duopoly, he said.
Under the new policy, the ceiling price of a particular drug
would be calculated by taking the arithmetic m ean of the prices
of all the brands that have more than 1 percent market share, a
federal minister told Reuters.
More details of the policy were not immediately available.
While the move is negative in theory for pharmaceutical
companies, its impact will be limited, Nomura said in a note.
The policy is likely to be more negative for companies such
as GlaxoSmithKline Pharmaceuticals, Dr. Reddy's
Laboratories, Glenmark Pharmaceuticals and
Cadila Healthcare, Nomura said, as their drugs are
priced higher than some others.
Patented drugs are not covered by the policy, though India
is considering a mechanism to regulate prices of medicines which
are covered by patent protection.