Escalating Input Costs May Jack Up Drug Prices

Hyderabad, Sept 20 | Updated: Sep 21 2004, 05:30am hrs
Following a sharp increase in input costs, pharma companies are reeling under pressure. With this, despite a control mechanism in place, there are possibilities of a rise in the overall drug prices across the country. The industry seems to be in a fix with a hike in the input costs on one hand and falling drug prices due to increased competition on the other. This has led to a squeeze in profit margins of pharma companies, especially the mid-sized ones, in the country.

Speaking to FE, Dr BPS Reddy, newly-elected Bulk Drug Manufacturers Association (BDMA) president said, For few raw materials, the prices have shot up by over 100% due to rise in the international crude prices. While we are under pressure with the increase in the manufacturing costs, at the same time, we have to maintain the prevailing prices of the drugs, he said. This has been one of the factors for relatively low profit margins for bulk drug manufacturers, he said.

The input costs account for about 25% of the total cost of production which is quite significant, Dr Reddy pointed out. According to few other industry officials, this factor alone could escalate overall drug prices. However, it remains to be seen whether the National Pharmaceutical Pricing Authority will look into those factors which can take care of unhealthy competition in some areas, said the officials.

What do we do when there is pressure from all ends We can neither increase the prices nor cut down costs or even reduce the manufacturing capacities in the plants. Either way, we are under pressure, said an official from a pharma company adding that it is not in their hands to control the international crude prices too. Finally, the rise will soon be passed on to the consumer, the official added. Meanwhile, despite all the odds, the bulk drug industry is upbeat on increasing its export turnover.