The National Pharmaceutical Pricing Authority has imposed a blanket ceiling on the prices of insulin, irrespective of the brand.
While the move is set to bring down insulin prices, it has left the industry upset as it expects to lose significant margins due to the cap.
Major players in the segment include Novo Nordisk, Eli Lilly and Sanofi.
Among the domestic companies, Biocon and Wockhardt are likely to be the most impacted by the move.
In a recent order, the NPPA has notified two separate price ceilings for domestic and imported insulin.
The price of domestic insulin is fixed in the range of Rs 135.12 to Rs 144.80 for different pack sizes, whereas the ceiling price for imported insulin ranges between Rs 160.26 and Rs 200.01 depending on the pack.
Earlier, while insulin was under price control, pharmaceutical companies had separate prices fixed by the drug regulator for individual brands.
However, the latest move would ensure there are only two prices for insulin -- one for domestically manufactured and the other for imported insulin.
"Insulin is a product of mass consumption and there are various players in the market.
"Therefore, it is important to have a level playing field as far as pricing is concerned.
If the product is the same, why should one have differential pricing based on brands?" a senior NPPA official said to Business Standard.
The official added the authority might impose such a ceiling on various other essential therapeutic areas,
Domestic manufacturers feel the NPPA is being unjust by allowing a higher price cap for imported insulin.
"Domestic companies make investments in the country and build facilities and the government is favouring multinationals by giving a higher price to imported products.
"They are enjoying huge premiums," Wockhardt Chairman Habil Khorakiwala said.
Biocon CMD Kiran Mazumdar-Shaw echoed the view.
According to Shaw, the government should put a common ceiling price on every drug under price control without discriminating between the imported and domestic varieties.
"The latest ruling with two ceiling prices defeats the purpose and fails to address the basic issue," Shaw said.
According to Khorakiwala, the current price of imported insulin is 20-30 per cent higher than that produced domestically.
"We are working under a thin marketing margin, whereas MNCs are able to push for a bigger market share because they have huge premiums on their products to support marketing," Shaw said.
The domestic companies are now planning a review petition with the Department of Pharmaceuticals and the Prime Minister's Office against the NPPA order.
"We will now write to the PMO for intervention against this order," Shaw said.
Domestic companies argue their lower share is mainly because of the premium pricing allowed to foreign players.
While the prices of domestic insulin are calculated based on the audited cost data by the regulator, it determines the ceiling price for imported products based on landed cost, over which it allows a premium to companies.