IMPERFECT POLICY

After a gap of 18 years a new pharmaceutical pricing policy is going to be notified by the Central government once that is cleared by the Union Cabinet. The Group of Ministers (GoM) approved the policy draft on last Thursday to bring formulations of 348 bulk drugs under price control as against 74 drugs and their formulations in the 1994 drug policy.

A major deviation in the new policy is the adoption of market based pricing for fixing formulation prices instead of cost plus formula followed currently. Under the new system, the prices of drug products will be fixed on the basis of the average price of all brands in a therapeutic segment that has more than one per cent market share. Another major change in the policy draft is the exemption of bulk drugs from the ambit of price control. By expanding the list of price controlled formulations in the new policy.

GoM said that the span of control in the pharmaceutical industry would be 30 per cent as against 18 per cent currently. As per the 1994 drug policy, the companies were also allowed to raise prices up to 10 per cent every year in case of all drugs other than the 74. And as a matter of right, the companies have been jacking up the formulation prices of more than 500 drugs which are outside price control even when their costs remained static or dropped.

The new pharmaceutical policy leaves as much as 70 per cent of the drug products marketed in the country outside any kind of price control. Definitely this is a policy intended to benefit the pharmaceutical industry and not in the interest of the patient community. Organization of Pharmaceutical Producers of India representing foreign drug companies and Indian Pharmaceutical Alliance, a body of top dozen Indian companies are not happy with new policy as they consider the profitability of their member companies may be hit.


By taking average of prices of all brands in a therapeutic group for price fixation can bring down prices of some products of MNCs and top Indian companies. Because, product prices of these companies are very high whereas prices of many medium and small scale companies are much lower.

Indian chemical industry - Growth

The Indian chemical industry was the second largest producer in Asia in terms of volume, after China. The Indian chemical industry is currently at US $136 Billion approximately, and is likely to grow at a compound annual growth rate of 10-12 percent over the next five years. 

Over the last decade, the Indian chemical industry has strengthened its competitiveness in agrochemicals and pharmaceuticals segments, becoming one of the major exporters for these segments, globally. The industry also witnessed increased investments in the specialty sector, which is poised to be the fastest growing segment in India.

The challenges and opportunities in the chemicals and materials space in context to the global chemicals and materials industry. The event will also seek to provide an understanding of the mega trends, technology and innovation impacting the industry, and the role of various stakeholders for leveraging these opportunities.

The Industry

    When evaluating the overall industry, factors to be looked at include:

1. size of the market,
2. past and potential market growth,
3. competitive profitability,
4. new market entries,

These market factors must be evaluated on a regular basis, as small changes may have a large impact on an organization’s business activities. For example, if an organization becomes aware of new technology that is on the verge of being introduced into the marketplace, then it can avoid making any new plans that would involve the older, existing technology available. Also, if an organization is

Considering global expansion, then it would be beneficial to be aware of emerging markets, other areas of potential growth, and what other companies have already entered in those markets.

The Competition

A company must be able to identify the strengths and weaknesses of the competition and analyse the ways in which the Competition’s products or services meet the needs of its customer base. 

Has the competition created a significant product differentiation strategy? Has the Competition cornered a specific target market? Is the competition in full-scale Competition with another company? It is essential for these questions to be answered in order to develop the appropriate strategy for successful competition.

As discussed how competition for an airline is not only other airlines, but also other modes of transportation. Evaluating competition requires a company to look at organizations that provide substitutes for its product or service as well as those who provide the same products and services.

Strengths & Weaknesses

Let’s go back to the traditional, well-known marketing tool of the SWOT analysis.

As you may recall, SWOT is an acronym for Strengths, Weaknesses Opportunities and Threats. Opportunities and threats are external factors; strengths and weaknesses are internal factors.

When developing a competitive strategy, it is vital for an organization to be fully aware of its internal strengths and how those strengths relate to the competition. These strengths should be maximized and leveraged to the company’s Advantage as well as highlighted in all business and marketing activities that the company undertakes.

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