Manipulating market forces is not easy. The government agreement with trade and industry associations about capping Trade margins will soon become farcial.The difference between generic generic and branded generic is very thin.Most of the generic generics have brand name and manufacturers will soon declare them in to branded generic category by simply showing their franchisees as employees on contract basis.Once AIOCD Ltd takes shape as the largest purchasing agency in India all price related agreements go to wind.
Traditionally industry and trade associations are born to benefit their members interest. They act as pressure groups by looking after the politicians and officials.To expect them to act against the interests of their members is foolish.Unfortunatley Mr.Paswan got carried away by the sayings of Associations. With vigilant press and alert judiciary functioning well, and with Left parties acting as watch dogs it is not easy to manipulate market forces.The coming parliamentary session in December is going to be stormy.
The ongoing Pharma Summit should not end up as opportunity for launching blame game. The industry should cheer 200% set off for research expenses on profit till 2015.
With more than 50% market controlled by 20 leading companies, we live in imperfect competition. The sat want Reddy committee should examine historical documents like balance sheets and drug prices of leading companies. In spite of price controls we have built highest formulating capacity in the world in 1980 S it self. Although prices have doubled and trebled in the last fifteen years with limited controls, the benefits of liberalization are not reaching the poor. Even today for some products like nifedipine the packaging cost is more than actual drug cost.
The leader price system and 100% MAPE have worked well. The marketing expenses were in check. The liberalization only caused sky rocketing marketing costs. Every company ashamedly woos the doctor or trader with high margins. The institution of medical representative has been reduced to sale broker. The industry associations should sit together and bring about ethical code of business practices. Today even The Minister has realized the profit margins in some branded generics is above 1000%.
Before DPRC becomes a reality the government should ensure effective participation of Medical profession and consumer groups . The government should ensure till such time the comprehensive policy becomes act
1. Increase MAPE to 200% for all products.
2. Ensure sufficient funding for government health programmes is available by creating the forgotten health surcharge.
3. Ensure at least 2% of GDP is spent on health.
4. Reduce excise duty on all products to 8%.
5. Make uniform trade margins for all products.
