The Indian government has allowed pharmaceutical companies to raise the maximum retail prices (MRPs) for drugs. Pursuant to the Drug Price Control Order (DPCO) 2013, essential medicine prices are capped at the average increase of all drugs in a certain segment that have more than 1% market share. Since implementation of the 2013 DPCO, prices of essential drugs have dropped up to 40%. However, the Indian government allows price increases in line with the expansion of the wholesale price index, which was 6.32% in 2013. There are 348 bulk drugs (650 formulations) on India’s essential drugs list.
Medicines that are not on the essential drug list — and thus are not subject to direct price control — can be priced by the drug company upon product launch. The retail prices of these drug products can then be increased 10% annually. Companies were allowed to increase prices on April 1, 2014. Manufacturers of essential drug list products should inform the National Pharmaceutical Pricing Authority (NPPA) within 15 days of price increases. The NPPA will also maintain oversight of non-essential products’ price increases.
Certain active pharmaceutical ingredients (APIs) had been included in the previous DPCO (1995). However, APIs were not included in the 2013 DPCO, meaning that the 72 previously included bulk API products will be able to raise their prices significantly in 2014. Indian manufacturers produce approximately 500 different APIs, comprising about half of the domestic API market. The other, lower-end half of the market is mostly provided by Chinese imports. API prices are projected to increase up to 20% in 2014.
However, due to inflation; competition from China; and the rising costs of raw materials, logistics, manufacturing and packaging, the price increase in pharmaceutical products and APIs might not translate into a significant rise in profits for drug companies and manufacturers.