India's National Pharmaceutical Pricing Authority (NPPA) has announced a sixth round of price revisions for 2011, affecting 146 formulations including 11 of Eli Lilly & Co (US)'s insulin products and the removal of methylprednisolone from the scheduled list, all due to take effect within 15 days. In addition, annual revisions to the norms of conversion cost, packaging charges and process loss of materials were announced.
IHS Global Insight Perspective | |
Significance | India's National Pharmaceutical Pricing Authority (NPPA) has announced the sixth round of price revisions for 2011 as well as the annual revision of norms for conversion costs, packaging charges and process loss of materials, with mostly upward revisions in line with inflation and costs. |
Implications | The revisions are focused on therapeutic segments such as analgesics, antidiabetics, antihistamines, vitamins, antibiotics and corticosteroids. The changes to the norms for conversion cost, packaging charges and process loss of materials will help improve pharma firms' margins in the face of increasing operating cost pressures, compounded by rising inflation. |
Outlook | The price and cost revisions will be reflected in the retail segment within the next two weeks. Pharma firms affected by the upward price and cost revisions can expect the revenue impact to be reflected in the ensuing financial quarters. |
NPPA Revises Prices
India's National Pharmaceutical Pricing Authority (NPPA) on 28 November revised the prices on 146 formulation packs and announced the withdrawal of price notifications for methyl prednisolone formulations in its monthly price revision. The pricing regulator also revised the prices of monocomponent insulin made by US major Eli Lilly & Co, in accordance with the recent orders of the Delhi High Court and the review order passed by the Department of Pharmaceuticals (DoP), according to the official notification. The prices for 11 packs of monocomponent insulin were refixed. The NPPA removed methyl prednisolone from the scheduled category with immediate effect, as per a notification issued on 1 July 2011 notifying that methyl prednisolone is not a derivative of scheduled bulk drug prednisolone, and therefore is considered as a non-scheduled bulk drug under the Drug Prices Control Order (1995). The pricing regulator also set the price for Biocon (India)'s UNIVIA brand at a maximum retail price (MRP) of 153.19 Indian rupees (USD2.99).
The price revisions affect formulation packs of ibuprofen, analgin, quinidochlor, rifampicin with combination, doxycycline, trimethoprim with combination, glipizide with metformin, chloroqine, oxytetracycline, rifampicin, trimethoprim with combination, norfloxacin with metronidazle, monocomponent insulin, vitalux plus TR, UNIVIA human insulin, Huminsulin, Beplex Forte, and dextrose/sodium chloride (IV fluids). The fixed/revised prices will become effective within 15 days from the date of notification in the official gazette. The prices were revised on the basis of applications received from companies and applied based on cost-price. The list of all price revisions can be accessed here.
Some Formulation Packs Fixed/Revised | ||||||
Formulations | Strength | Pack Size | Existing MRP (INR) | Ceiling Price (INR) | New Equivalent MRP—Including All Taxes (INR) | % Price Change |
Glipizide+metformin tablets | Glipizide 5 mg; metformin hydrochloride 850 mg | 10s strip/blister | - | 12.88 | 13.87 | - |
Ibuprofen tablets | Ibuprofen 200 mg | 10s strip/blister | 3.42 | 3.67 | 3.95 | 15.5 |
Analgin tablets | Analgin (metamizole) 500 mg | 10s strip/blister | 7.50 | 7.68 | 8.27 | 10.3 |
Quiniodochlor tablets | Quiniodochlor 250 mg | 20s aluminium strip | - | 14.94 | 16.09 | - |
Rifampicin capsules | Rifampicin 150 mg | 10s strip/blister | - | 16.39 | 17.62 | - |
Doxycycline tablets | Doxycycline monohydrate 100 mg | 10s strip/blister | 7.08 | 8.92 | 9.61 | 35.7 |
Monocomponent insulin/huminsulin injection | Each ml contains 40IU human insulin | 10-ml vial | 160.26 | 160.26 | 166.67 | 4.0 |
Monocomponent insulin huminsulin 30/70 | Each ml contains 100IU of 30% neutral insulin solution and 70% isophane suspension human | 3-ml cartridge | 202.97 | 202.97 | 211.09 | 4.0 |
Source: NPPA | ||||||
NPPA Revises Conversion, Packaging and Material Costs
The NPPA has revised the norms for conversion cost, packaging charges and process loss of materials, with immediate effect, as per its annual exercise. For full details of the changes, the notification can be accessed here.
Selected Revised Cost norms | |
Conversion Costs | |
Formulation | Cost (INR) |
Tablets plain (per 1,000 Nos.) | |
Small (up to 100 mg) | 9.22 |
Medium (101 mg - 350 mg) | 12.78 |
Large (351 mg - 600 mg) | 22.45 |
Extra Large (601 mg - 900 mg) | 26.49 |
Extra Extra large (901 mg - 1,200 mg) | 31.52 |
Extra Extra large (above 1,200 mg) | 31.52+0.76 for each 100 mg over 1,200 mg |
Packaging Costs | |
Formulation | Cost (INR) |
Liquids, Syrups, Elixirs, Suspensions, Emulsions & Malts | |
Up to 30 ml | 0.55 |
31 ml - 60 ml | 0.89 |
61 ml - 150 ml | 1.19 |
151 ml - 250 ml | 1.45 |
251 ml - 500 ml | 2.00 |
Over 500 ml | 2.00 + ( 0.0011 x number of ml over 500 ml) |
Source: NPPA | |
Outlook and Implications
This is the NPPA's sixth price revision for 2011, with alterations to take effect within 15 days as usual, an indication of the regulator's increased stringency and regular timelines in controlling drug prices. The NPPA periodically revises prices of drugs in the Indian pharma market in a bid to contain large price disparities for the consumer. The price revision has primarily seen increases for the drugs involved. The price increases have taken into account the inflation rate of 9% and rising raw materials costs, and are in line with the NPPA's promise to the government that its upward price revisions would remain below the rate of inflation. The upward revisions come as the NPPA is under competing pressures from the Indian Supreme Court, to prevent further drug price increases, and from the industry, which is experiencing rising costs across the board. The removal of methyl prednisolone from the scheduled category is a significant change allowing the firms with methylprednisolone products to freely price their products, allowing for increased margins and competition. The price revisions will help to keep the affected drugs affordable and within reach of patients, although there will be a slight increase in immediate out-of-pocket expenditure on drugs. The changes in costs and prices will improve the pharma firms' profitability. This time around, the price rises will benefit most companies, and will mean higher margins for both wholesalers and manufacturers, and could help reduce the pharmaceutical industry's resistance to the government's plans to bring essential drugs' under price control (see India: 8 November 2011: Changes to NPPA's Pricing Policy and Function Cause Unease for Domestic Players in India). The upward price revisions of 146 formulations will raise growth in value-based drug sales and health spending within the next two weeks.