Dpco 2013
Dpco 2013
Dpco 2013
Margin to retailer
While fixing a ceiling price of scheduled formulations and retail prices of new drugs, 16% of price to retailer as a margin to retailer shall be allowed as against earlier 20%.
Maximum retail price
(1) The maximum retail price of scheduled formulations shall be fixed by the manufacturers on the basis of ceiling price notified by the Government plus local taxes wherever applicable, as under:
Maximum Retail Price = Ceiling price + Local Taxes as applicable
(2) The maximum retail price of a new drug shall be fixed by the manufacturers on the basis of retail price determined by the Government plus local taxes wherever applicable, as under:
Maximum Retail Price = Retail Price + Local Taxes as applicable
Ceiling price of a scheduled formulation in case of no reduction in price due to absence of competition
Where the average price to retailer of a scheduled formulation, arrived has the effect of(a) No reduction in average price to retailer with respect to the prices to retailer of the schedule formulation & (b) There are less than five manufacturers for that formulation having one percent or more market share,
The ceiling price shall be calculated as under:
I.
In the event of other strengths or dosage forms of the same scheduled formulation is available in the list of scheduled formulation, the average price to retailer shall be calculated by applying (to the highest priced formulation to the retailer under consideration) the average reduction in the average selling price to the retailer of other strength and dosages w.r.t to the highest priced formulation taken for calculating the average price to retailer of such strengthens and dosage forms. To which the retail margin is added to compute the ceiling price. In the event of other strengths or dosage forms of the scheduled formulation is not available in the schedule but there are other scheduled formulations in same sub-therapeutic category as that of the scheduled formulation, then the Ceiling Price shall be calculated by applying (to the highest priced formulation to the retailer under consideration) the average reduction in the average selling price to the retailer of other scheduled dosages in the same sub therapeutic category as that of the scheduled formulation under consideration w.r.t to the highest priced formulation taken for calculating the average price. To which the retail margin is added to compute the ceiling price.
II.
III.
In case the other strengths or dosage forms of the scheduled formulation are not available in the schedule and there is no sub therapeutic category of the scheduled under consideration, the ceiling price shall be calculated by applying(to the highest priced formulation to the retailer under consideration) the average reduction in the average selling price to the retailer of other scheduled dosages in the same therapeutic category as that of the scheduled formulation under consideration w.r.t to the highest priced formulation taken for calculating the average price. To which the retail margin is added to compute the ceiling price.
has decreased by twenty five percent or more than the number of manufacturers as existing on the reference date. 3) When the number of manufacturers of a scheduled formulation, having prices of their scheduled formulation equal to or lower than twenty five percent of the ceiling price fixed by the Government, has increased by twenty five percent or more than the number of manufacturers as existing on the reference date.
Imported Drugs
The Ceiling Price determined for drugs falling under the span of control would be the same for another scheduled drug. There will be no separate determination of Ceiling Price for imported drugs falling under the span of control.
Pricing of the formulations covered under Drugs (Prices Control) Order, 1995
The prices of scheduled formulations, which are also specified in the First Schedule to the Drugs (Prices Control) Order, 1995, fixed and notified under the provisions of the said order, up to 31st May, 2012, shall remain effective for further one year i.e. up to 30th May 2013 and the manufacturers may revise the prices of such scheduled formulations as per the annual wholesale price index for the previous calendar year announced by Department of Industrial Promotion and Policy and thereafter the formula for pricing the scheduled drugs.
Conclusion:
The proposed drug pricing policy, is in line with the earlier New Drug Pricing Policy declared in 2012 declared. The order has recommended that the retail price of essential 348 drugs will be fixed at simple average price of brands that have more than 1 % market share. We dont believe that the policy in its current form is not negative, as the policy is based on average price mechanism and thus follows competition. Given the price competition, the policy is unlikely to have any major negative implication for the sector. However amongst the domestic and MNC player, the latter would be impacted the most, as they mostly price their products much higher than the competition and then derive their 100% of the sales from domestic markets. The domestic companies not having very huge exposure to the domestic market, will be insulated to a large extent, as the pricing is not the key growth driver for their growth. Their products are therefore competitively priced. Mover, with the realist price control under place, which is more attuned to market forces, the industry will boost the overall volume growth in the Industry, the main growth driver for the industry. Thus, we maintain our positive view on the sector, with Lupin, Cadila Healthcare, DRL, Aurobindo Pharma, IPCA Labs, Dishman Pharmaceuticals and Indoco Remedies.
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