Ministerial panel recommends price control for 348 essential drugs

By Annie Banerji and Kaustubh Kulkarni

NEW DELHI/MUMBAI (Reuters) - A panel of ministers has recommended price regulation for 348 drugs deemed essential, up from 74 earlier, a minister said, a move that is likely to hit prices of costly brands sold by domestic as well as multi-national drugmakers.

The panel has finalised the proposal and it would be forwarded to the cabinet within a week, telecommunications minister Kapil Sibal told reporters on Thursday.

The ceiling price of a particular drug would be calculated by taking the weighted average of the prices of all the brands with a more than 1 percent market share, Srikant Jena, minister of state for chemicals and fertilisers, told Reuters.

Multiple combinations of the 348 essential drugs would not come under price control, Jena said.

The new policy, if approved, would regulate prices of about 27 percent of the total drugs sold in India, Nomura said in a note.

Shares in drugmakers like GlaxoSmithKline Pharma (NSI:GLAXO.NS - News) and Ranbaxy Laboratories (NSI:RANBAXY.NS - News), Cadila Healthcare (NSI:CADILAHC.NS - News) and Dr Reddy's Laboratories (NSI:DRREDDY.NS - News) are expected to see price corrections if the policy is finalised, Nomura said.

The maximum price for 74 drugs covered by the old policy would be calculated using a cost-based formula and not the market-based pricing, he said.

India is the world's fourth-largest drug market by volume and 14th largest by value.

The country's annual drugs sales are about 650 billion rupees at the retail level, while government agencies buy about 110 billion rupees of medicines at discounted rates every year.

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Ministerial panel recommends price control for 348 essential drugs