Rajiv Nath, Forum Coordinator, AiMeD
NPPA (The National Pharmaceutical Pricing Authority) fixing the ceiling price of drug eluting stents (DES) and bioresorbable stents at Rs 30,000 and that of bare metal stents at Rs 7,500 effective from notification on February 14.
• It's an overkill. The Indian Stent Manufacturers are a beaten beleaguered lot and working at an average of 8 percent EBIT ( profits ) compared to Pharma at 40 percent.
Citing serious concerns Rajiv Nath, Forum Coordinator AiMeD said “Law and Rules need to be reasonable and implementable with smooth transition and not disruptive. The worst thing about this notification is that NPPA / DPCO expect all stocks in market to be available at New price over night.”
We had asked for average of price to hospital to be basis, anything less than Rs. 40,000 – 50,000/- would be on harsh side.
The big questions are:
• If distributors have bought stents at Rs. 60000 or so, how can they put MRP of Rs. 30000?
• How can manufacturers recall stocks with 5 years shelf life and keep nothing in markets?
• Confusion and fights in every hospital of what should be charged?
“Hospitals will demand credit notes for loss made on inventory they hold. Manufactures will be asked by DoP to pay penalty for not acting overnight. If importers and manufacturers go to court ultimately public and patient are the one who will suffer. Ideally the implementation should have been from a cutoff date and next batch. The requirement of all stocks in market to be sold at revised price is impractical and unreasonable. Laws and rules should be reasonable and easy to follow.
AiMeD has always been exhorting members and importers for self-regulations whether for patients safety under ICMED Quality certification or consumer protection by a Self-imposed price cap for each brand / size to be 4-5 times of ex - factory/ import landed . We have always been apprehensive that if we don't follow self-regulations or a reasonable line Government will need to step in and history has shown when it does, it over does! Then all cry! Unfortunately MNC Importers are opposed to ICMED certification and also to price cap so we can't have one section of industry go for self-regulations and starve themselves out of the market while the majority market holder - Importer MNC keep on jacking up their MRPs?
Indian Stent Manufacturer Gurmeet Chugh, Managing Director, Translumina Therapeutics, said “This MRP is detrimental for the domestic Stent manufacturers and may kill this upcoming Industry. We had asked for average of price to hospital .We are sure that the price points taken for imports and manufacturing are erroneous. There is a huge spend in R& D to keep upgrading the technologies and such knee jerk pricing regulations shall ensure the survival of only fly by night operators. Morever, the requirement of all stocks in market to be sold at revised price is impractical and unreasonable.This move may appear populist but will ultimately kill the ecosystem where Indian manufacturers shall keep manufacturing low end technologies.
“AiMeD has consistently asked for a separate body for regulating prices for medical devices as NPPA do not have necessary infrastructure to understand this evolving field and are creating disruption rather than a balanced fair approach to all stakeholders and allowing for smooth transition.” Added Chugh.
We concede "Even our holier than thou generics have invested zilch in research. While the quantum of markup by the MNCs on their original research molecules can be debated, the fact that they or Indian manufacturers who do investment in R&D and Technology development deserve a ROI ,cannot be denied. But this should reflect on higher Ex factory price and not by higher MRP to Ex factory multiples” said Nath. Pricing Cap to be achieved by average price method as is for other Schedule Drugs . We think it's ok to cap MRP then lets have competitiveness on each stages of buying price rather on their selling price and the margin they make and consumers will gain.
Comparing Margins ( EBIT) Across Industry and Within Healthcare: Five sectors contribute 50 percent of the Country’s IIP , lets look at their EBIT vs Indian Stent Manufacturers
EBIT Across Industries
Enginering Goods 12.90 percent
Automotive 19.50 percent
Oil and Gas 27.10 percent
Chemicals 20.90 percent
Textiles 16.40 percent
Banking 54 percent
Pharmaceuticals 40 percent
Indian Stent Manufacturers 8 percent.