The stock of multinational drug maker Sanofi India fell over 10 per cent today, after the Indian drug pricing authority capped the price at which the company can sell its key cardiac and anti-diabetes drugs.
The National Pharmaceutical Pricing Authority (NPPA) has sought to control the prices of 50 drug formulations which are used to treat diabetes and cardiac disorders. The list includes key anti-diabetes molecules such as metformin Hcl, gliclazide, glimepiride, pioglitazone and sitagliptin.
Drugs such as amlodipine, valsartan and temisartan used to treat hypertension and associated cardiac problems have also been brought under the ambit of price control. These molecules cumulatively account for 11 per cent of the Indian pharma market.
According to a data compiled by market research firm AIOCD AWCS, the prices of over 57 per cent of the total molecules available to treat cardiac disorders are currently under price control. Likewise, the prices of nearly 21 per cent of the anti-diabetes formulation are now controlled by the pricing authority.
In the listed space, multinational drug maker Sanofi India is likely to be the worst hit by this move. The company’s key brands such as Amaryl, Cetapin V and Clexane, which are priced at a substantial premium to others, have now been brought under price control.
A sharp fall in the prices of these drugs will hurt the company’s profitability substantially. These brands account for over 30 per cent of the company’s domestic revenues.
Drug majors such as Cadila Healthcare, Ranbaxy Laboratories, Lupin, Torrent Pharma, Glenmark Pharma, Merck and Dr Reddys derive about 10-20 per cent of their sales from these molecules.
However, given that the sales price of many of these brands are in the mid-range of the pricing band, the impact on profitability may not be very significant. These stocks did not see much action after the announcement.