India Cuts Prices on Key Bulk Drugs

April 4, 2005

India's National Pharmaceutical Pricing Authority (NPPA) has reduced prices on 22 bulk drugs and 16 "derivative" products, purportedly to account for a reduction in taxes under the latest national budget. One leading basic product affected, which will receive a 17% cut, is the tuberculosis treatment rifampicin, produced by local companies as well as Sandoz, the generics business of Novartis. The Swiss drug major recently transferred its rifampicin plant in Maharashtra directly to Sandoz, along with a INR220mn (US$5mn) government supply contract awarded last year.

Overall, the average cuts on the Maximum Selling Price established by the NPPA range from 0.09% to 6.81%, although local firms have agreed to larger cuts of up to 50% on some products, including the antibiotic ingredient cefadroxyl monohydrate and the antifungal tolnaftate.

Although the reductions have been approved by drug producers, India's pricing policy is likely to remain the subject of criticism for some time. Notably, in the wake of last month's introduction of a new patent regime, pricing remains a key plank in retaining government control in the sector, with tight official policy prompting many manufacturers to expand abroad and cut costs in order to remain viable.