[Ip-health] Pharma price control has stunted innovation, study finds
tahir at i-mak.org
Thu Jul 16 13:06:51 PDT 2015
NEW DELHI: Consumers may be happy at a cut in medicine bills but the
government's price control measures have forced many brands out of the
"unviable" pharmaceutical market, resulting in a drastic slowdown in new
launches in the last five years.
>From an average of four new drugs being launched in any specific category
in 2011, the number has dropped to a mere one in 2014-15, implying a 75%
decline in new launches, according to estimates by IMS Health — a leading
healthcare market research agency.
Not just that, data collected since 2013, when the new pharmaceutical
pricing policy came into place, show a sharp decline in consumption of
That's because of a growing push for alternative options outside price
With lower margins in price-controlled medicines, there is also less
incentive to reach out to rural markets. "For low-income households that
are reliant on the government system for healthcare, DPCO (Drugs Price
Control Order) would not improve the patient's ability to purchase drugs.
This is supported by the fact that no significant penetration of
price-controlled molecules in rural markets is visible...," says a latest
report 'Assessing the Impact of Price Control Measures on Access to
Medicines in India' by IMS Health.
According to the report, consumption of price-controlled medicines in rural
areas dropped by 7% in past two years, whereas sales of other medicines
increased by 5%. It says even in Tier-II and III cities or in places
outside metros, such medicines have witnessed a muted growth.
While the objective behind price control of medicines was primarily to
increase affordability and accessibility, the industry argues that the move
has failed to achieve these objectives because policy measures have
impacted tail-end brands more than the leading players.
"When you try to bring in artificial intervention, there can be distortion
in the market," says DG Shah, secretary general of Indian Pharmaceutical
Alliance. Shah said price control has increased the market share of leading
brands in particular segments because doctors are now prescribing them more
since their prices have come down. As a result, these brands have eaten
into the share of smaller ones, making it unviable for many small and
"The DPCO 2013 has resulted in an increase in market concentration (fewer
brands are now listed) and a decrease in competitive intensity (the average
number of new brands have gone down since 2013)," the report said.
Drug manufacturers also blame price regulations and policy uncertainty for
making India an unattractive destination for both domestic as well as
multinational pharmaceutical companies.
However, public health experts brush aside such concerns saying companies
manufacture one medicine under several brands with different compositions
and regulations are aimed at bringing them at par in terms of pricing.
Co-Founder and Director of Intellectual Property
Initiative for Medicines, Access & Knowledge (I-MAK)
*Email:* tahir at i-mak.org
*Tel:* +1 917 455 6601/+44 771 853 9472
More information about the Ip-health