The move brings an additional 15 per cent of the retail medicine market worth over Rs 4,000 crore (Rs 40 billion) under direct price control. All domestic companies, including drug majors like Ranbaxy, Cipla, Lupin and Dr Reddy's, have syrups and tonics in their product portfolio.
To begin with, the authority has notified the maximum retail prices for 16 specific medicines, including multivitamins and antibiotics, on January 31.
To ensure that companies do not escape price control by changing the strengths or volumes of the syrup or liquid, the notification covers all formulations that use the 74 common raw materials (bulk drugs) that come under price control.
NPPA has also calculated the maximum allowable prices for all possible pack sizes -- from one ml to 500 ml -- to ensure that no pack can escape price control.
Though the practice of changing the quantity and composition of medicines to evade price control is common across the domestic pharmaceutical sector, none of the companies is willing to acknowledge that the NPPA decision will drive it to lower prices.
"The NPPA notification might affect companies that evade price control by changing their compositions. But the drug industry, by and large, does not indulge in such practices," said Dara Patel, secretary general of the Indian Drugs Manufacturers Association.
NPPA and its administrative ministry -- chemicals and fertilisers -- have been at loggerheads with domestic drugmakers on this issue for some time.
Under current practice, NPPA fixes the maximum retail price of specific strengths and packs of medicines. All other medicines that contain even a single ingredient or bulk drug under price control are legally required to get NPPA approval. However, some companies evade the mandatory approval and, owing to NPPA's inadequate monitoring mechanism, sometimes get away with overcharging consumers for years together.
In an attempt to plug this gap, NPPA has been trying to fix the prices of as many specific products as possible. So far the focus was on fixing the ceiling prices of drugs that are sold in tablet, capsule and powder forms.
Senior NPPA sources said the authority will widen the scope of the newly introduced pricing mechanism to all price-controlled medicines in a phased manner.
"Prices of other items like injectables, ointments and vials, for which no ceiling prices are currently fixed, will also be covered in the coming days," officials said.
In a separate notification on January 29, the authority also revised the prices of 245 specific packs of medicines which include commonly prescribed antibiotics, vitamins and insulin.
