Case Study On Government’s Drug Pricing Control And Strategies By Pharma Companiesfor Retailing

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Case Study On Government’s Drug Pricing Control And Strategies By Pharma Companiesfor Retailing

Journal Title: International Journal of Business and Management Invention - Year 2018, Vol 7, Issue 2

Abstract

This case study attempts to analyse the purpose and consequences of drug pricing control by the Government of India on the pharmaceutical industry’s strategy and growth prospects for its retailing.The study has been done on two of the major drugs manufactured by the top notch drug manufacturing companies in the world like Bayer and Novartis.The study has further analysed the effect of drug pricing control by the Government on the pharmaceutical industry as a whole. The rationale behind selection of these companies is their considerable market share in the world pharmaceutical industry and the wide range of life saving drugs being offered by them. Based on the existing list of 348 drugs which have been brought under Drug Pricing Control in 2013, 60-70% of the industry has come under price control which is squeezing the margins of wholesalers, retailers up to the extents of 50 percent. The profit cuts have led to shortage of these medicines in market as wholesalers and retails have slowed down the buying rate due to low margins. Hence, we can say Drug Pricing which has been introduced for a noble cause has also caused havoc in people’s life, thus Government should regulate compulsory licenses in India to manufacture these essential lifesaving drugs instead of controlling prices by stringent mechanisms. The purpose with which the Government undertakes drug pricing control is to make the drugs affordable, available and accessible. However excessive price control reduces the attractiveness of the pharmaceutical industry and dampens the growth prospects of the drug manufacturing companies as they face cost constraints as domestic manufacturers make generic drugs at a much cheaper price. The case study highlights that excessive drug pricing control is not good for the pharmaceutical industry. The purpose with which the Government undertakes drug pricing control is to make the drugs affordable, available and accessible. However excessive price control reduces the attractiveness of the pharmaceutical industry and dampens the growth prospects of the drug manufacturing companies as they face cost constraints as domestic manufacturers make generic drugs at a much cheaper price apart from taking a hit on development of our R&D sector. The drug manufacturing companies like Roche, Bayer, Novartis, Glen mark & Pfizer have lost market share and now face cost constraints. This is because they have lost patent fights and now domestic drug manufacturers produce generic drugs which are much cheaper than the specific version.

Authors and Affiliations

Dr. Navita Mahajan

Keywords

EP ID EP399846
DOI -
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