Mumbai, July 9: An expert committee formed to study drug conversion costs and packaging charges (CCPC) is understood to have granted an increase of around 4.5 per cent in these charges. This interim relief to the pharmaceutical industry comes even as the expert group is believed to have left the process loss norms unchanged.Industry sources say that while the CCPC norms have been increased by around 4 per cent in the case of capsules, in the case of liquids and ampoules this increase is in the region of around five per cent and 12 to 15 per cent respectively. No official confirmation on this could, however, be got.
Loosely put the conversion cost indicates the manufacturing cost while the packing charges comprise the labour cost and the depreciation related to the packing activity.
An increase in the CCPC norms would mean revised prices in the case of price controlled drugs though the National Pharmaceutical Pricing Authority (NPPA) will have to notify the new prices. In the case of price controlled drugs, material costs account for roughly 50 per cent of the net sales value.
Industry experts say that this increase in CCPC would impact operating margins by roughly one percentage point and would lead to a six to seven per cent increase in earnings. It is also believed that the expert committee has, in principle, agreed to review the CCPC norms on a year on year basis, a much lauded move by industry.
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