NEW DELHI: Chemicals and Fertilisers Minister Ram Vilas Paswan said on Tuesday that the span of price control on drugs and formulations would be expanded in the draft pharmaceuticals policy, while steel producers might be faced with indirect price regulations. At the same time, he sought to reassure the domestic drugs industry that the new policy would extend price controls to only eight per cent more of the market than the existing 25 per cent of drugs (in value terms) covered by price regulations.

Addressing a press conference here on Tuesday, he said the 354 formulations, proposed to be brought under price control in the new policy, formed only eight per cent of output in value terms. The existing 74 bulk drugs covered by pricing regulations accounted for 25 per cent. Thus, he said, only 33 per cent of medicines would be brought under price controls.

On rising steel prices, he said the Steel Ministry would be holding talks with private producers to check the trend. He said this was essential as the private industry controlled about two thirds of the market, while public sector steel units had only one-third of the market. He pointed out that even if public sector companies lowered the steel prices, it would not affect the overall market prices unless private players did the same. He said middlemen were making profits from the price differential between the public and private sector players in the market.

Asked whether the dialogue with the private sector on prices would lead to controls, he said the discussions were in the interest of consumers. He said previously the steel companies had agreed to cut prices by Rs. 2,000 a tonne when talks were held with them.

Mr. Paswan felt that the drug industry's concern over the draft pharmaceutical policy was not warranted as 67 per cent of medicines would still remain outside the ambit of price controls. The proposals for the new policy were needed to keep the UPA Government's commitment of providing low cost drugs to the common man and to abide by the Supreme Court's order of making essential medicines affordable to the public. Besides, he said the Health Ministry had prepared the list of essential medicines and his Ministry was merely implementing the orders. He felt that there was a fundamental difference between the earlier price control order and the present proposal and the two should not be viewed in the same light. The present draft policy was aimed at controlling prices of only essential drugs, while the earlier drug price control order aimed at ending the monopoly on drugs by companies.

Referring to his recent visit to Japan, the minister said several Japanese chemicals and pharmaceutical companies were keen to invest in India, including Mitsubishi Chemicals which has already committed Rs. 1,665 crore investment for capacity expansion at its its purified terephthalic acid (PTA) plant at Haldia from 4.70 lakh tonnes to 12.70 lakh tonnes.

'Policy will be disastrous'

Mumbai Staff Correspondent reports:

The proposed increase in the scope of the Drug Price Control Order (DPCO) from the existing 74 drugs to cover 354 in the National Pharmaceutical Policy 2006 can have disastrous consequences for the industry, according to Ajay Piramal, Chairman, Nicholas Piramal India, and Chairman, CII National Committee on Drugs and Pharmaceuticals.

The Confederation of Indian Industry (CII) organised a meeting on the Draft Pharmaceutical Policy 2006 here on Tuesday. "It will leave the Indian industry with no funds for R&D activity and drugs will not reach the vast doctor base. Also, the intention of having rural penetration will not be fulfilled if the pricing of drugs is not attractive," said Mr. Piramal.

Further, he said the status quo should continue. "Prices are not increasing and have, in fact, come down over the last four years mainly because of the healthy competition and prices of Indian drugs are among the lowest in the world. Drugs are cheaply and widely available and there is adequate incentive for R&D investments."

Mr. Piramal said to date no Indian company had come out with its own researched product. While internationally, the cost of bringing a drug to the market through R&D was around $1 billion, "in India, it works out to around $150 million or Rs. 700 crore. So, it is highly capital intensive and requires a lot of encouragement, particularly in the product patent regime."

Ranjit Shahani, Chairman, Novartis India, and President Organisation of Pharmaceutical Producers of India (OPPI), said, "there are enough brands for practically all molecules to take care of price and a product like Ciprofloxacin has more than 100 brands in the country.

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