rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » Drug prices dip 70% from entry levels

Drug prices dip 70% from entry levels

November 10, 2003 10:42 IST

The Rs 19,000 crore (Rs 190 billion) domestic pharmaceutical industry, which comprises over 13,000 brands, has witnessed a sharp drop in drug prices over a period of time.

The trend is pertinent in case of drugs not under the Drug Drugs Price Control Order and introduced after 1993, whose prices have dropped by over 50-70 per cent from their introductory level.

The development assumes significance as domestic pharmaceutical companies till date have prospered piggy-backing on new drug launches.

Now, with prices of new products (which have essentially been the growth drivers) dipping and with the product patent regime just round the corner, domestic pharmaceutical companies have to re-design their growth model.

Pharmaceutical industry organisations are also positioning the trend as a strong case against price control.

According to an ORG Marg report, "The pharmaceutical industry has matured to such a level that even if certain products are not under price control, the competition and market forces would keep a check on the prices."

According to the report, the price level of new products including amlodipine (an anti-hypertensive), azithromycin, sparfloxacin, levofloxacin, gatifloxacin and clarithromycin (anti-bacterials), silymarin (liver protectant), lovastatin, clopidogrel and atorvastatin (cardiovascular), respiridone (anti-psychotic), carvedilol and losartan (anti-hypertensive), lamivudin (anti-virals), have fallen by 2-83 per cent from their introductory price levels.

Ashok Jain, chief executive officer (pharma division) of Unichem Laboratories said, "A fall in input cost coupled with severe competition has led to a drastic fall in drug prices primarily over the last two years. Raw material prices have fallen by 20-40 per cent over a period of three-six years."

Unichem's prime brand Losar (an anti-hypertensive) saw its price level per 50 mg 10 tablets pack dip by 33.8 per cent from Rs 54.48 in December 1998 to Rs 36.05 in 2003.

The decline in prices, according to drug makers, have, however, not had a major impact on the bottomlines of companies as on one hand raw material costs have come down, drugs becoming affordable has increased their patient base.

Ranbaxy's Loxof (an antibacterial) introduced in 1999 witnessed a 83 per cent decline in price level (price to retailer) to Rs 52.9 per mg 5 tablet pack from an introductory price level of Rs 311.85.

In 2001, the price of Loxof to a retailer was Rs 201.06. Its Storvas (cardiovascular) price declined from Rs 172 per 10 mg 10 tablets pack in December 1999 to Rs 60.63.

A pharmaceutical sector analyst said, "Sales growth of Indian companies come largely from new product launches (which initially command higher prices) unlike in the cases of MNCs in India whose sales growth came largely from price increases of established brands (in the absence of new product launches). Of course, the scene is going to change as new product launch opportunities dry up for Indian firms in the wake of impending patent changes."

Prices of Cipla's Lovoflox, Lamivir (anti-virals), Atorlip (cardiovascular) have declined from Rs 81.25 in December 2001 to the current price of Rs 27.9 per mg 5 tablet pack, down 65.7 per cent; from Rs 500 in December 1998 to Rs 113.2 per 150 mg 10 tab pack, a 77.4 per cent decline; from Rs 170.46 in December 1999 to Rs 61.55 per 10 mg 10 tablets pack, a dip of 64 per cent, respectively.

"The new products reach the penetration price level shortly after the launch. Also, the industry has seen the introduction of new molecules at a fraction of the expected cost per day. Doctors have been shifting their patients from one product to another depending on the price to make medication affordable," said a senior executive of one of the Mumbai-based leading pharmaceutical company.

Sun Pharma's Cardivas, Repace (antihypertensives), Gatilox (an anti-bacterial), Clopilet (cardiovascular) and Sizodon (an anti-psychotic) have witnessed 60 per cent, 35.9 per cent, 72 per cent, 76 per cent and 50.5 per cent drop in prices, respectively, compared with their introductory prices to retailers.

Cipla's new products, including Gatrim, Nicholas Piramal's anti-bacterial brand, saw a 71.5 per cent decline in prices from Rs 199.57 per 400 mg 5-tablet pack in December 2001 to Rs 56.84 now.

The prices of Dr Reddy's brands Lostatin (cardiovascular) and Gaity (an anti-bacterial) fell by 61.7 per cent and 69.2 per cent, respectively.
Rumi Dutta in Mumbai