Glaxo manufactures the bulk drug from the basic stage, furfuryl alcohol, employing the technology developed by its parent, Glaxo Welcome, UK. According to the company, the formulation manufactured from the bulk drug, Zinetac tablets, commands a market share of around 43 per cent of all ranitidine formulations.

The company has submitted that the drug was sold in the country at a very low price--even cheaper than an antacid--with the price almost 1/30th of its UK price and 1/70th of its US price.

"The low price fixedby the government could eventually lead to the closure of its ranitidine manufacturing plant at Ankleshwar," the petition adds. The government, through a notification dated March 16, 1994, had reduced the price of ranitidine from Rs 4,396 a kg to Rs 1,835 a kg. Aggrieved by the notification, Glaxo filed a review application challenging the price fixation.

Other pharma companies, including Cheminor Drugs and Shashun Chemicals, joined Glaxo's review application which was turned down by the government. Owing to the reduction in customs duty, the government further slashed the bulk drug price of ranitidine on September 7, 1995, from Rs 1,835 a kg to Rs 1,714 a kg.

The maximum sale price of ranitidine was notified by the govenrment on July 28, 1997, at Rs 1,203 a kg. Glaxo filed a review under DPCO raising various issues against the arbitrary price fixation.

Representations were also made to the ministry of chemicals and fertilisers and the Bureau of Industrial Costs and Prices by the company. In Decemberlast year, the company filed a writ petition to quash the notification fixing the maximum sale price of ranitidine. The company also sought personal hearing to dispose of its review applications to the union chemicals and fertiliser secretary, according to the law laid down by the Supreme Court in the Cyanamid India case.

The ministry has also been accused of not furnishing the relevant data and material considered by the government to the company while fixing the bulk drug price at 1,203 a kg as laid down in the Cyanamid case.

"The Bureau of Industrial Costs and Prices adopted the methodology of cut- off at two-thirds level and has considered the cost data of Cheminor, which is the largest producer of ranitidine," said Mahendra I Sethna, counsel for union of India. According to him, the review application of the company transgresses the limitations placed by the apex court on the supremacy of price-control functions of the government in respect of essential drugs.

In an communique to the ministry ofchemicals and fertilisers, Glaxo India managing director HR Khusrokhan said that ranitidine, whose consumption in the country is around 300 tonnes per annum (as against Rs 1,200 tonnes worldwide) has gone off-patent in July last year. "This gives an opportunity for the country to become a major exporter in the generics market," the petition states, adding that the low domestic market will act as a deterrent in obtaining better prices in the export market.