DRUGMAKERS OPPOSE INDIAN PRICE-CONTROL PLAN

Indian and foreign pharmaceuticals companies have joined forces to attack draft legislation that would extend significantly price controls on medicines and could remove the commercial case for investing in new drugs in the country.

Swiss drugmaker Novartis and Nicholas Piramal, an Indian rival, are leading the revolt against moves they claim would strangle margins, discouraging expansion into rural areas.

The 74 drugs under government price control account for 30 percent of industry sales; the additional 354 would cover 80 per cent of sales.

The immediate concern is that more price controls would introduce a scarcity premium and encourage the country's buoyant unregulated sector to step into the void with lower-quality copy-cat drugs, as well as lead to costlier imports.

The longer-term fear is that domestic companies would be deterred from investing in R&D because price controls would curb commercial returns.