Pharmaceutical Firms Find It Hard to Exit Essential Drugs Market


Pharmaceutical companies having more than a 1% market share for any essential drugs may find it difficult to stop manufacturing those products. Since May, when the government brought into force a new drug-pricing system after a gap of 18 years, the National Pharmaceutical Pricing Authority has denied such requests whenever the market share of the essential drugs the companies wanted to discontinue was more than 1%, government officials told ET.

"If we allowed one such player with a significant market share to withdraw, we cannot stop other such players from doing it. This may create an exodus of many players from essential drugs, change the market dynamics drastically and even create a shortage," an official said. The pricing authority has internally set a 1% mark beyond which it refuses to grant permission for companies to exit unless it is assured that there would be no shortage of the drug in the market, he added.

According to Amit Backliwal of IMS Healthcare, a global pharma market research firm, a decision on this matter should be taken only after a detailed assessment of multiple factors like whether there were new treatments in the therapy, changes in the prescription behaviour of physicians and the financial burden on a company from making such a product.

"By such an arrangement, the government wants to ensure there is no disruption in the availability of a particular essential drug in the market, which is what it is expected to do," Backliwal said. On the flip side, forcing companies to sell molecules or categories that are not performing well can lead to them unnecessarily getting burdened on their cost and overall business performance.

"Once a company stops marketing their drugs, in a branded generics market like India, it will slip in rank and lose market share below 1%," he said. Under the latest pricing policy, pharma firms cannot just quit making essential drugs citing non-viability.

They would have to issue a public notice and alert the government about their decision at least six months in advance. The government can ask a company to continue producing an essential drug at a certain level for another year in public interest. The government can do this for any of the 348 drugs that are part of the National List of Essential Medicine.

Drug makers also have to disclose on a quarterly basis the levels of essential drugs and bulk drugs they are producing to enable the government to monitor their availability in the Rs 75,000-crore domestic drug market. The need for such a move was felt in the latest pricing policy as many pharma firms had stopped making and investing in drugs that were put under regulations in the current price system. The companies claim they have been forced to discontinue as these drugs are no longer economically viable. 

Source:The Economic Times

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