INDIA AWAITS DRUG PRICING REFORM PROPOSALS

A pharmaceutical industry "task force" is currently preparing a set of proposed reforms to India's drug pricing structures. The plans -- due for publication at the end of this month -- follow a recent ruling by the country's Supreme Court to bring all "essential" drugs under price control. However, the government has previously pledged not to add any further products to its notoriously harsh pricing regime, despite the launch of many high-value patented products this year.

The legal basis for India's price controls is found under the long-standing Essential Commodities Act, which imposes ceilings on key products such as rice and coal. However, industry sources argue that this structure is inappropriate for pharmaceuticals, and officials now plan to scrap the Act, potentially removing the legal foundation for India's so-called Drug Price Control Orders. The Task Force is now expected to recommend a price monitoring system, rather than a heavily bureaucratic controls structure which would attempt to restrain the prices of all pharmaceuticals.

Meanwhile, international reports suggest that sales by Indian drugmakers have recovered strongly in June through mid-August 2005, leaping 19% over the previous three-month quarter to INR89.24bn (US$2.05bn). Local industry observers have attributed the rise to sales of inventories which had accumulated following the recent imposition of value-added tax on pharmaceuticals. The reports also claim Indian firms' profit margins increased to 19.5% from 14.9% in the previous quarter.