Firms offer to sell drugs cheaper

Close on the heels of a government proposal to fix trade margins on both branded and generic drugs, a section of the Indian pharmaceutical industry has offered to sell drugs at a margin that is 25 per cent less than the brand leader in the market.

The Confederation of Indian Pharmaceutical Industry, a body of 20 associations across the country, made the suggestion in a meeting with Chemicals and Fertilisers joint secretary G S Sandhu on Wednesday.

"The high trade margins are limited to a band of 10 to 15 products. But the order if notified will affect small-scale manufacturers adversely. Since the government's primary concern is providing drugs at a lower price, we have made this suggestion," CIPI Co-chairman PK Gupta told Business Standard.

The final picture may, however, emerge when the Indian Drug Manufacturers' Association is slated to meet ministry officials.

The order, which is yet to be notified, specifies that in the case of non-scheduled drugs the margins for branded drugs should be 10 per cent for wholesalers and 20 per cent for retailers. For generic drugs, these should be 15 per cent and 35 per cent, respectively.

According to industry estimates, unbranded generic drugs account for about 7 per cent or Rs 1,700 crore (Rs 17 billion) of the industry's retail sales.

After carrying out investigations into the prices of three drugs, the government had arrived at the conclusion that the industry was giving huge margins, often in excess of 1,000 per cent, to retailers in order to push sales.

As this was pushing up prices of medicine, the government has come out with a set of guidelines on retail margins that can be given by companies.