This Article is From Jul 14, 2013

New drug pricing policy may hit revenues up to 5 per cent: Dr Reddy's


The new drug pricing policy being implemented by the government may impact Dr Reddy's Laboratories (DRL) revenues by 3-5 per cent from India, the drug maker said.

In a filing with US Securities and Exchange Commission, Dr reddy's also said some of the provisions of European Falsified Medicines Directive may cause delayed exports to European Union.

India recently enacted the National Pharmaceuticals Pricing Policy, 2012. As a result, hundreds of drugs on India's national list of essential medicines were identified and subjected to price controls in the country.

On May 15, 2013, the department of pharmaceuticals released drugs (price control) order, governing the price control mechanism for 348 drugs in the national list.

As per this order, the prices of each of the drugs are determined on the average of all drugs having an Indian market share of over 1 per cent by value. The individual drug price notifications are being released in a phased manner by the National Pharmaceutical Pricing Authority.

"Based on these notifications and, for products where these notifications are not yet released, based on information on prices of manufactures available as per IMS Health, we believe that we could be adversely impacted by approximately 3 to 5 per cent of our annual revenues from sales of all of our products in India," the filing noted.

Dr Reddy's revenues from generic sales in India stood at Rs 1,456 crore during 2012-13, accounting for 20 per cent of the company's total revenues. The company has launched as many as 24 new brands in the market during the year.

"As of March 31, 2013, we had a total of 294 branded products in India. Our top 10 branded products together accounted for 36 per cent of our revenues in India in the year ended March 31, 2013," DRL further informed.

On the new EU Regulation on API exports, DRL said in practice, full implementation of the directive by July 2013 could delay import of API for many important medicines into European Union countries in those cases where manufacturers will be unable to supply the required documentation.

The European Medicines Agency in its directive said effective July 2, 2013, all active substances manufactured outside of the EU and imported into the EU must be accompanied by a written confirmation from the competent authority of the exporting country which confirms that the standards of good manufacturing practice (GMP) and control of the manufacturing plant are equivalent to those in the EU.

In case of India, Drug Controller General of India (DCGA) is the competent authority to issue WC or written confirmation.