Further reduce drug prices

Biocon chairperson and managing director Kiran Mazumdar Shaw today raised concerns that the new government's intention to bring down prices of essential drugs by 25-40 per cent could deter manufacturing of such medicines by companies.

After taking charge, Fertilizer and Chemicals Minister Ananth Kumar had stated that he would talk to pharmaceutical companies and try to bring down prices of essential drugs by 25-40 per cent.

"Minister Ananth Kumar's mandate to further reduce drug prices can potentially deter quality drug makers from manufacturing essential drugs," Shaw said on the micro blogging site Twitter.

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.

Untested - Drug's

Central Drugs Standard Control Organisation last week came out with a stand that it will not review or recall the 33 controversial drugs found to have been approved for marketing in the country during 2008-10 without clinical trials by the Parliamentary Standing Committee on health & family welfare. The conclusion of the Parliamentary Standing Committee was that  a collusive nexus existed between medical experts, pharmaceutical companies and the CDSCO officials while approving drugs for marketing in the country.

The report of the panel also pointed out the unethical deals between the pharmaceutical companies and the regulatory officials in getting approved the unsafe drugs in India. The CDSCO is of the view now that approvals granted by the competent authority were 'in order' and there was no need to re-examine the approvals or recall any  drug from the market on grounds of errors in approval process. Therefore, there will be no action with regard to these 33 drugs unless some specific instruction come from the Union Health Ministry.
 
An expert committee has been constituted to suggest measures to improve the functioning of the office of CDSCO and DCGI soon after Standing Committee’s report came out last month. The three-member committee is headed by V M Katoch, director general of the Indian Council of Medical Research. This committee is also expected to look into specific cases against medical experts and suggest actions to be taken by the Medical Council of India.

The health ministry has  to remember that there was tremendous  pressure from the public interest groups and independent medical experts for taking immediate action to suspend marketing of these drugs circulating  in the country. The fact is that these drugs, without assessing their safety and efficacy, are already there in the market and are being prescribed by the physicians. It is quite difficult to estimate how many people might have already injured and suffering due to intake of such untested drugs. No drug control administration should ever dare to allow the pharma companies to market any medicine without proven efficacy and safety. 

Experimental Drug shows - Resistant leukemias

Research in mice and human cell lines has identified an experimental compound dubbed TTT-3002 as potentially one of the most potent drugs available to block genetic mutations in cancer cells blamed for some forms of treatment-resistant leukemia. Results of the research by Johns Hopkins Kimmel Cancer Center investigators, described March 6 in the journal Blood, show that two doses a day of TTT-3002 eliminated leukemia cells in a group of mice within 10 days. The treatment performed as well as or better than similar drugs in head-to-head comparisons.

More than 35 percent of acute myeloid leukemia (AML) patients harbor a mutation in the gene FMS-like tyrosine kinase-3 (FLT3). Normal FLT3 genes produce an enzyme that signals bone marrow stem cells to divide and replenish. But when FLT3 is mutated in some AML patients, the enzyme stays on permanently, causing rapid growth of leukemia cells and making the condition likely to relapse after treatment.

Many investigators are developing and testing drugs designed to block the FLT3 enzyme's proliferation, several of which are now in clinical trials. So far, their effectiveness has been limited, according to Donald Small, M.D., Ph.D., the Kyle Haydock Professor of Oncology and director of pediatric oncology at Johns Hopkins. Small led a team of researchers who originally cloned the FLT3 gene and linked it to leukemia a decade ago.

Pharma and Chemicals market

The demand for pharmaceuticals is going to be the major driving force for the growth of Indian chemical markets. Pesticides as well as colours and paints also showed an exceptional market performance. The Indian annual market for pharmaceuticals was estimated with Rs 563.7 billion (US $ 12.8 billion) for 2009/2010 by the Centre for Monitoring Indian Economy. Pesticides went up by eight per cent to Rs 136.9 billion (about US $ 3 billion), about the same size as the market volume of colours and paints.

Most basic chemicals showed a significant drop in market volume. Only Benzol though a comparatively small market segment, showed a good growth value. Especially synthetic resins (- 6 per cent) and caustic soda (- 21.6 per cent) performed poorly.

The market for Urea, soaps and cleaning agents remained more or less stable. Analysts predict strong growth rates, driven by a growing domestic demand.

The Indian market for pharmaceuticals is expected to grow by an average rate of roughly 20 per cent per year up to US $ 74 billion in 2020. Experts feel that increasing prosperity will also sharpen the Indian population's interest in strong trademarks. Drugs against diabetes and gastric ulcer are expected to show highest growth rate on the Indian market. Since the Indian average expenditure for personal hygiene products is about US $ 3.4 per year, analysts expect a big growth potential for cosmetics in the near future.

Patented - Products

The market size for patented drugs as of today is very small. Only about 1-2% of the market is made up of patented drugs, which are being sold by multinational innovators.

There are multiple Indian companies that have drugs in the pipeline, with a greater focus on R&D, but estimates suggest that it would be at least 7 to 10 years before these begin to have a serious impact on the industry.

 

 

Industry experts believe that the current size of the patented drug market is estimated at US$120-130 million. Due to weak patent laws in the past, and multiple, cheap generic versions of drugs present in the market, multinational players were hesitant to introduce their patented products.


In the future, with growing affordability, deepening of health insurance and steady improvement
in Intellectual Property Rights (IPR), patented product launches should increase.

BITTER PILL

India’s pharmaceutical industry may be considered as a defensive play in the stock markets as it is not subject to business cycles, but the sector is also going through a slowdown.

The Indian pharmaceutical market saw its pace of growth slowing to 9.8 per cent in 2013 from 16.6 per cent in 2012. According to a CII-PwC report —India Pharma Inc; changing landscape of Indian pharma industry — the slowdown is a result of the new drug pricing policy and the regulatory interventions over the past year.

 

While the growth rate declined after November last year from an average 16 per cent to 8 per cent, the sector showed a compounded annual growth rate (CAGR) of around 15 per cent from 2010 to 2012.

“This slowdown can be attributed to the national pharmaceutical pricing policy announced in 2012, higher growth in the corresponding previous quarters and the price corrections leading to low uptake among stockists in the second quarter of 2013 after the price policy was implemented.

Through the new policy, the government brought 348 drugs under price control from 74 earlier.

Both Indian and multinational companies were hit by the slowdown. However, the slowdown was more prominent among MNCs. In 2012, the top five MNCs had grown at the rate of 16 per cent, which fell to 7 per cent this year. The top five Indian companies saw their growth declining to 12 per cent in 2013 from 16 per cent in the previous year.

The number of new products introduced went down from around 1900 in 2010 to, approximately, 1700 in 2012. Of all the launches by April this year, the maximum were anti-infectives (468), pain-analgesics (435) and gastro (389) therapies.

 

Moreover, the sector was facing delays in clinical trial approvals. The government’s FDI policy has also sparked some confusion. The government allows 100 per cent FDI in greenfield investments under the automatic route. But since November 2011, brownfield investments require the approval of the FIPB.