Indian drug companies' ability to invest in research and compete in the market-place stands to get hurt by the recently circulated draft Pharmaceutical Policy, said Mr Dilip Shanghvi, Chairman and Managing Director, Sun Pharma.
There is no realistic assessment of the industry's need to invest in the local business and compete in international markets, he told Business Line . Today, the industry is forced to fight with both hands tied, even as it competes with big international players who are several times bigger than the domestic firms, he said.
The recently circulated draft pharma policy proposes, among other things, to expand the coverage of price control from 20 per cent of the domestic market to about 60 per cent. As outlined by the draft, all 348 medicines listed in the National List of Essential Medicines (NLEM) are to come under price control.
It is “objectionable” as the policy is “populist” and looking at a short term dip in medicine prices, without taking the long term adverse impact on the domestic drug companies' ability to invest in research or manufacturing. “There is nothing in the policy to encourage research or manufacturing,” he said.
Access
If Sun Pharma set up a manufacturing plant with a capacity to make about three billion tablets at X cost, today that cost has gone up by four times, not because of the price of machinery – but the standards have changed, he explained.
Drug companies are willing to sit with the Government to discuss various options where they supply drugs at cost price for the Government to distribute and improve access, he said. Every product, including food-grains have a market-price versus a ration price, and the Government can look at such fair-price channels, he suggested.
Domestic drug companies are requesting the Government to go by a recommendation of the Sen panel (also appointed by the Government) – where all NLEM drugs are under price control – not expanding the ambit to combinations of these drugs as well.
Under Price Control
The range of drugs under price control for Sun Pharma will increase about “four to five times” from the present “single digit”, he said.
Echoing similar concerns, Cipla Executive Director, Mr S. Radhakrishnan observed that the positives of the draft policy are that it is linked to the selling price and not the cost of production.
But if the draft policy becomes law without changes, it would have a three percent impact on Cipla's topline, he said. At present, about 40 of Cipla's basket of over 1000 products are under price control and this would increase to about 120 products under the proposed new regime, he added.