Drug & Pharmaceuticals
  • Under the provisions of the Drugs (Prices & Control) Order, 1995 (DPCO, 1995)
    05 Aug, 2014

    Under the provisions of the Drugs (Prices & Control) Order, 1995 (DPCO, 1995), the prices of 74 bulk drugs listed in its First Schedule and the formulations containing any of these scheduled drugs are controlled. National Pharmaceutical Pricing Authority (NPPA) fixes or revises prices of scheduled drugs / formulations as per the provisions of the DPCO, 1995. In respect of drugs - not covered under the DPCO, 1995 i.e. non-scheduled drugs, manufacturers fix the prices by themselves without seeking the approval of Government / NPPA. However, the trend in prices of non-scheduled drugs is monitored and suitable action is taken by NPPA where price increase is more than 10% in a period of one year on moving basis.

    The National Pharmaceutical Pricing Policy-2012 (NPPP-2012) has been notified on 07.12.2012. As per the provisions of NPPP-2012, all the manufacturers/importers manufacturing/importing the medicines as specified under National List of Essential Medicines, 2011 (NLEM-2011) shall be under the purview of price control. The objective of NPPP-2012 is to put in place a regulatory framework for pricing of drugs so as to ensure availability of required medicines – “essential medicines” – at reasonable prices even while providing sufficient opportunity for innovation and competition to support the growth of industry, thereby meeting the goals of employment and shared economic well-being for all.

    Further, in order to provide relief to the common man in the area of healthcare, a countrywide campaign in the name of ‘Jan Aushadhi Campaign’ has been initiated by the Department of Pharmaceuticals, Government of India, in collaboration with the State Governments, by way of opening up of Jan Aushadhi Generic Stores in the Government Hospitals to make available quality generic medicines at affordable prices to all. As on 28.2.2013, 149 Jan Aushadhi Stores have been opened in different States/UTs in the country.

    As informed by Ministry of Health & Family Welfare, during the 12th Five Year Plan, the Central Government has envisaged an initiative for free supply of essential medicines in public health facilities in the country with the aim to provide affordable health care to the people. A sum of Rs. 16000 crore has been approved for the scheme for the 12th Plan period

    Manufacturing and Marketing of Drugs

    As per Directory of Pharmaceutical Manufacturing Units in India 2007 maintained by National Pharmaceutical Pricing Authority (NPPA), there are 10563 pharmaceutical manufacturing units across the country. These include 8174 formulation manufacturing units and 2389 Bulk Drug manufacturing units. The drugs are produced in different forms such as liquid, tablets, capsules, bulk drugs etc. There is no information regarding the quantum of drugs manufactured by these drug manufacturing companies.The manufacturing of drugs by the non-registered companies is not permitted under the Drugs and Cosmetics Act. The manufacturing company requires a valid license to manufacture drugs.

    Price of Life Saving Drugs

    As a part of price-monitoring activity, National Pharmaceutical Pricing Authority (NPPA) regularly examines the movement in prices of non-scheduled formulations. Wherever a price increase beyond 10% per annum is noticed, the manufacturer is asked to bring down the price voluntarily failing which, subject to prescribed conditions, action is initiated under paragraph 10(b) of the Drugs (Prices Control) Order, 1995 (DPCO, 95) for fixing the price of the formulation in public interest. Based on monitoring of prices of non-scheduled formulations, NPPA has fixed prices in case of 30 formulation packs under para 10(b) of DPCO, 1995 and companies have reduced price voluntarily in case of 65 formulation packs. Thus in all, prices of 95 packs of non-scheduled drugs have got reduced as a result of the intervention of NPPA.

    The Department of Pharmaceuticals had prepared a draft National Pharmaceutical Pricing Policy (NPPP-2011) based on the criteria of essentiality and requirements as stipulated by the Ministry of Health and Family Welfare. The draft NPPP-2011 has been circulated among the concerned Ministries/Stakeholders. The draft Policy was also available for comments for other interested person on the Department’s website www.pharmaceuticals.gov.in till 30.11.2011.The National Pharmaceutical Pricing Authority has fixed/ revised the prices of 154 drug formulation packs as on 19th July, 2012. Of these, Ceiling Prices have been fixed in respect of 138 drug formulation packs, which are applicable to all manufacturers. Company specific Non-ceiling prices have been fixed in case of 16 packs of drug formulation. The prices have been fixed for the first time in respect of 33 drug formulation packs. No price increases have been allowed in respect of 17 packs keeping the consumer interest in view. In the case of 80 packs, the prices have been reduced from the existing level ranging from 0.12% to 37.76%. In the case of 24 packs, prices have been increased ranging from 0.64% to 31.40% to accommodate the unavoidable increase in input Raw material cost, Conversion cost, Packing Charges and Packing Material Norms in order to make availability of the essential drugs to the consumers. In absolute term the price reduction ranges from `0.04 to `3.52 per pack.The drug formulation containing the Vitamin C & its derivatives have been revised on Suo-moto basis to pass on the benefit of reduction in bulk drug prices to consumers as manufacturers failed to send price revision application to NPPA within the stipulated time limit of 30 days as per DPCO, 1995. In these cases the prices have been reduced ranging from 0.12% to 37.76% than the existing price resulting lower price for Vitamin C formulations which will benefit the consumers at a large. The revised prices have been fixed strictly per the provisions of the Drugs (Prices Control) Order (DPCO), 1995 and the guidelines in this regard. The revised price lists are to be issued by the manufacturers/importers under sub paragraph (3) of paragraph 14 of the DPCO, 1995 and the compliance should be reported to the government/NPPA, State Drug Control Authorities and distributors, wholesalers and retailers or any other agent. The prices were fixed in respect of derivative formulations of the bulk drugs namely, Aspirin with Rosuvastatin (Cardiovascular), Cefotaxime (Antibacterial), Chlorpromazine with combination (Antipsychotic), Vitamine E (Tocopheryl) (Vitamin E Supplement), Streptomycin with Penicillin (Antibiotic), Norfloxacin (Antibacterial), Vitamin C with combination (Vitamin C Supplement and Antioxidant), Sulphadoxine with combination (Antimalarial), Dexamethasone with combination (Anti-inflamatory).

    Export and Import of Medicines

    India is a large importer of pharmaceutical products from various countries in the world including China and Mexico. India’s country-wise exports and imports of drugs, pharmaceuticals and fine chemicals is attached at Annexure-I & Annexure-II respectively. India’s total exports and imports of drugs, pharmaceuticals and fine chemicals during the last three years is under.

    Values in Rs. Crore
    Year Export Import
    2009-10 42455.66 9959.00
    2010-11 48810.26 11113.86
    2011-12 63347.32* 14384.88*

    Financial Assistance for Small Drug Makers

    Ministry of Micro, Small and Medium Enterprises (MSME) is implementing the Credit Linked Capital Subsidy Scheme (CLCSS) to provide incentives to micro and small enterprises for technology up gradation for approved 48 Sub-Sectors including Drugs & Pharmaceuticals Sub-Sector. Under this Scheme, 15% capital subsidy is provided up to a loan of Rs. 1.00 crore as per the guidelines of the Scheme. Technologies required for Schedule M compliance and National/International standards in the Drugs & Pharmaceuticals Sub-Sector were added to the list of eligible technologies under the Scheme on 13.7.2009. Under this Scheme, 294 Drugs & Pharmaceuticals micro and small enterprises have availed subsidy of about Rs. 19.76 crore since inception of the CLCSS up to March, 2012.

    Difference in Prices of Similar Drugs

    Under the provisions of the Drugs (Prices Control) Order, 1995 (DPCO, 1995) the prices of 74 bulk drugs and the formulations containing any of these scheduled drugs are controlled. NPPA fixes or revises prices of scheduled drugs/formulations as per the provisions of the DPCO, 95. The NPPA monitors the prices of all formulations including imported scheduled formulations under price control. Under the DPCO, no person can sell any formulation (medicine) of price controlled category to a consumer at a price exceeding the price notified/ approved by the NPPA/ Government. In case, a company is found selling at prices higher than the price notified/ approved by the NPPA/ Government, action is taken against them as per the provisions of the DPCO. In respect of drugs – not covered under the DPCO, 95 i.e. non-scheduled drugs, manufacturers fix the prices themselves without seeking the approval of Government/ NPPA. This may lead to price variation in the prices of similar medicines sold under different brands in respect of non-scheduled formulations. As a part of price monitoring activity, NPPA regularly examines the movement in prices of non-scheduled formulations. The monthly reports of IMS Health and the information furnished by individual manufacturers are utilized for the purpose of monitoring prices of non-scheduled formulations. Wherever a price increase beyond 10% per annum is noticed, the manufacturer is asked to bring down the price voluntarily failing which, subject to prescribed conditions, action is initiated under paragraph 10 (b) of the DPCO, 1995 for fixing the price of the formulation in public interest. This is an ongoing process. There are wide variations in the prices of non-scheduled drugs of different brands based on same chemical combinations as there is no control on the launch price of these medicines. The prices of decontrolled drugs are monitored and suitable action is taken by NPPA, as per the guidelines, in cases where price increase is more than 10% in a period of one year on moving basis.

    Control over Life-Saving Drugs

    The Supreme Court in its interim order dated 10.3.2003 in SLP (C ) No. 3668/2003 directed the Government, inter alia, to “consider and formulate appropriate criteria for ensuring essential and life saving drugs not to fall out of price control and further directed to review drugs which are essential and life saving in nature till 2nd May, 2003”. As per the directions of the Supreme Court, the Ministry of Health and Family Welfare reviewed the National Essential Drugs List 1996 and brought out the National List of Essential Medicines, 2003 (NLEM 2003). Keeping in view the directions of the Supreme Court it had been proposed in the Draft National Pharmaceutical Policy, 2006 which is at present before the Group of Ministers for a decision, that basket of drugs for price control would be the essential medicines as contained in the NLEM 2003 (subject to certain conditions and exemptions) in addition to the 74 drugs which are at present under price control under the Drugs (Prices Control) Order, 1995. GoM had not given its recommendation.

    Subsequent to this, the Department of Pharmaceuticals had prepared a draft National Pharmaceutical Pricing Policy, 2011 (NPPP-2011) based on the criteria of essentiality and requirements as stipulated by the Ministry of Health & Family Welfare. The draft National Pharmaceutical Pricing Policy, 2011 (NPPP-2011) has been circulated among the concerned Ministries/Stakeholders. The draft Policy was also available for comments of any other interested person on the Department’s website www.pharmaceuticals.gov.in by 30.11.2011.

    Indian Pharmaceutical Industry

    Indian Pharmaceutical Industry globally, is the 3rd largest producer of medicines by 3269+++volume yet 14th in terms of value. The lower value is due to the fact that Indian medicines are amongst the lowest priced in the world. Biotechnology has emerged as one of the key technologies of this century. Biopharmaceuticals have been projected as potential drugs curing many diseases. Given its potential, most of the global pharmaceutical companies are showing interest in the bio pharma sector.

    India is currently recognised as a high-quality, low-cost skilled producer of pharmaceuticals. It is seen not only as a manufacturing base for APIs and formulations, but also as an emerging hub for biotechnology, bioinformatics, contract research,clinical data management and clinical trials. The country’s pharmaceutical industry, as evidenced in the paragraphs which follow, has shown tremendous progress in terms of infrastructure development, technology base creation and a wide range of production. India exports full basket of pharmaceutical products comprising intermediates, APIs, Finished Dosage Combinations (FDCs), biopharmaceuticals, vaccines, clinical services,etc., to various parts of the world. The country has achieved the distinction of providing healthcare at very low cost while maintaining profi tability. At present, India is among the top 20 pharmaceutical exporters world-wide and with the largest number of US FDA inspected plants (119 plants), outside the USA. Various other agencies like MHRA UK, MCA, South Africa, TGA Australia, and HPB Canada have approved scores of plants in India.

    The combined total investment of 561 pharmaceutical companies stood at Rs.40,461.7 crores (net fixed assets stood at Rs.29,325crores). in the year 2008-09 Further, as per Centre for Monitoring Indian Economy (CMIE) database ‘Capex,’ an investment of Rs.5,903.1 crores in some 550 projects under implementation and new investment projects in 637 new proposals announced valued at approx. Rs.5,861.8 crores would result in the new investment of Rs.11,764.9 crores, which is an increase of 29 percent over the existing investment. In the year 200-11, the drug sectors income had grown by 12.8 per cent on account of healthy increases in sales in both domestic and international markets. According to Pharmexcil, India’s exports of Drugs,

    pharmaceutical & fi ne chemicals stood at Rs.42263 crore for the eleven month period from Apr2010– Feb 2011 with a growth rate of 11.33 % compared to the same period during the previous year. In US$ terms the exports have recorded 16.15% growth increasing to US$9.26bn as against US$7.97bn. USA continues to be the best destination country of India’s exports though the contribution to Total exports from USA is slightly down during the period, which has come down to 23.69 from 24.16% of the exports during April-Jan, 2010-11, with a Period-on-Period (POP) growth of 29%. UK is the second best destination with a POP of 9% and a share of 3.59% of total exports. The Ministry of Commerce has proposed an ambitious Strategy Plan to double pharmaceutical exports from US$ 10.4 billion in 2009-10 to US$ 25 billion by 2013-14. The Government has also planned a ‘Pharma India’ brand promotion action plan spanning over a three-year period to give an impetus to generic exports.

    The Indian pharmaceutical industry has grown from US $ 0.3 billion turnover in1980 to US $ 21.73 billion in the year 2010-11. Indian now ranks 3rd in terms of volume of production (10% of global share) and 14th largest in terms of value (1.5%). One reason for lower value share is the lower cost of drugs in India ranging from 5% to 50% less as compared to developed countries.

    Price movements of Drugs and Pharmaceuticals

    NPPA tracks the prices of drugs and medicines. Based on ORG-IMS data for July 2010, 60664 medicines were covered under NPPA. Out of these prices of 99.65 packs have remained unaltered, while the prices of another 0.14 % packs have declined and 0.22% packs witnessed increase in their prices.

    According to Fitch report, during 2012, earnings prospects for Indian pharmaceutical companies will continue to be guided by the growing preference for generics as well as opportunities provided by patent expiries in developed markets. Furthermore, other segments of the sector, namely contract research and manufacturing services, and the domestic market are also expected to continue to grow due to the favourable macro environment, stated the report. The drugs and pharmaceuticals sector attracted foreign direct investments (FDI) worth US$ 5.03 billion between April 2000 and November 2011, according to the latest data published by Department of Industrial Policy and Promotion (DIPP).The Indian pharmaceutical market is poised to grow to US$ 55 billion by 2020 from the 2009 levels of US$ 12.6 billion, as per a McKinsey & Company report titled “India Pharma 2020: Propelling access and acceptance realising true potential”. The industry further holds potential to reach US$ 70 billion, at a compound annual growth rate (CAGR) of 17 per cent.

    Government Initiative

    The government has decided to continue with the 100 per cent foreign direct investment (FDI) regime in the pharmaceuticals sector. Marking a new trend of investments from foreign players in the Indian pharma sector, the need for overseas investors to get a no-objection from their JV partner before venturing out on their own or roping in another local firm has been removed by the Pharmaceuticals Export Promotion Council. It is expected that this measure will promote the competitiveness of India as an investment destination and be instrumental in attracting higher levels of FDI and technology inflows into the country. The pharmaceutical industry has asked the Centre to incentivise the sector to encourage higher spending in research and development and bring down taxes and duties on life saving drugs and active pharmaceutical ingredients (API) to provide a stimulus to its growth Currently, Indian pharma industry’s annual market size including export is Rs 1 trillion (US$ 20.33 billion) with over 8,000 small and medium enterprise (SME) units engaging in this sector. Furthermore, a ‘Pharma Vision 2020’ has been prepared by the Department of Pharmaceuticals, for making India one of the leading destinations for end-to-end drug discovery and innovation and for that purpose provides requisite support by way of world class infrastructure, internationally competitive scientific manpower for pharma research and development (R&D), venture fund for research in the public and private domain and such other measures.