Report from: India - Pharmaceutical Technology

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Report from: India
The Indian government may soon monopolize its pharmaceutical industry to cut costs and improve healthcare, but the move is sounding off alarm bells with the companies whose drug products are under review.


Pharmaceutical Technology
Volume 32, Issue 11

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The government has asked drug companies and different associations to put forward its views on the subject. Several suggestions have been presented, but opposition to the proposal by multinationals is gaining momentum. Many contend that the buyout would lead to drug shortages and increased costs. OPPI, the apex industry body of multinational pharmaceutical companies, feels that the government's move, coupled with its failure to honor incremental innovation, could hinder long-term investments in the country's pharmaceutical industry.

In addition, OPPI says that several of its member companies may reexamine proposed investments in India. Member firms include Pfizer (New York), Eli Lilly (Indianapolis), GlaxoSmithKline (London), Bristol-Myers Squibb (New York), Sanofi Aventis (Paris), Astra-Zeneca (London), Novartis (Switzerland), and Novo Nordisk (Bagsvaerd, Denmark), among others.

Argues Naresh Trehan, president of the Indian Healthcare Federation, "India's healthcare sector is in a dynamic phase of growth, but the technology being provided must work toward providing affordable healthcare to all." Trehan, who has also been the past chairman of the Confederation of Indian Industry's national committee on healthcare, added, "It is imperative to accelerate growth through partnering and aligning with the key stakeholders including the healthcare service providers, medical technology industry and insurance providers.'"

Paresh Johri, deputy secretary in India's Department of Chemicals and Petrochemicals, said an inter-ministerial committee has been set up to examine the Australian and Canadian models, where the government fixes the price.

"Given the fact that a consumer in India is not in a position to negotiate prices as happens in the US and most other developed countries, there has to be some method of pricing which reflects the interests of the consumer," says IPA's D.G. Shah.

Gurdial Singh Sandhu, joint secretary in India's Department of Chemicals and Fertilizers, said several organizations have also recommended to the government that there should be differential pricing for medical devices used in the treatment of cardiac ailments in government hospitals so that less affluent people could afford treatment.

The wait ahead

Overall, India's proposal could be significant to the consumer as the cost of sophisticated medical devices adds substantially to already spiraling medical bills. Some surgical procedures are unaffordable to many patients due to the inflated cost of catheters and other devices. Some stents, particularly drugeluting ones, are priced at around Rs 1 lakh ($2133) and are clearly out of reach of the masses.

Whether the government's purported move covers expensive medical devices, generic-generics and even patented drugs, only time will tell. The fact that there is no discussion between the government and trade bodies on distribution tactics, or on what price the drugs and devices would be bought and sold has cooled tempers, for the time being. Given that the government is still debating the various pros and cons of the matter, a final solution may not come any time soon.

"Decision-makers inevitably have different concerns, represent different constituencies, and seek different consequences. The resulting tug and pull, trade-offs, and negotiations take time," says Prashantamyan Nair, pharma analyst at Mumbai-based investment firm, Edelweiss Securities. ``In some cases, the choice might be obvious, a 'no brainer,' but more often than not, the choice is not so obvious. Most times, some sort of agreement is reached, often through a majority vote. That could happen anytime before the winter session of Parliament, this December.''

A. Nair is a freelance writer based in Mumbai.


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