India set to see drug price hikes

Price hikes and new launches are to push the growth of the Indian pharma market in the coming months. Though volume growth could remain weak in the near term, the market is expected to grow at a high single to low double-digit rate in the upcoming months.

Prices of essential medicines including painkillers, anti-infectives, cardiac drugs and antibiotics are set to go up at the end of the month, with the government allowing drugmakers an increase in line with the change in the annual Wholesale Price Index (WPI).

The annual change in WPI notified by the government works out to 0.5% for 2020, according to the drug prices regulator National Pharmaceutical Pricing Authority (NPPA).

Pharma has been seeking a 20% increase

Prices of scheduled drugs are allowed an increase each year by the drug regulator, in line with the annual WPI. Not enthused with the increase for the year, and having been impacted with nearly 15% to 20% surge in manufacturing costs during the year, the pharma industry has been seeking a 20% increase.

Considering the high possibility of growth revival in Indian formulations on low base of fiscal 2021, stable pricing in US generics and sustenance of cost control initiatives seen during FY21 due to the pandemic, several financial institutions are positive on India's pharma sector.

A report by Emkay Global Financial Services noted sales of all major therapies, except respiratory, continued to grow, though at a slower pace. Sales to the USA, however, have stabilized over the past few quarters as price erosion has come down and new launches continue.

A robust demand from most economies has boosted India’s exports in the first half of the current fiscal. Regions such as the USA and Europe contributed to growth in exports, thanks to increased demand for drugs, especially antivirals and antibiotics for the treatment of COVID-19.