Modi Govt's Generic Push will dent Rs 90,000-cr branded Pharma Market

By: Pharma Tips | Views: 1504 | Date: 22-May-2017

Pharma companies may soon start wooing chemists as the Narendra Modi government plans to make it mandatory for doctors to prescribe pure-generic drugs, instead of branded generics as they do now.Though the plan was first announced in this year’s Budget, the prime minister spoke about it for the first time at a public event on Monday. The health ministry has now started working on amending the Drugs and Cosmetics Act to this effect.

Govt's generic push will dent Rs 90,000-cr branded pharma market

Pharma companies may soon start wooing chemists as the Narendra Modi government plans to make it mandatory for doctors to prescribe pure-generic drugs, instead of branded generics as they do now.

Though the plan was first announced in this year’s Budget, the prime minister spoke about it for the first time at a public event on Monday. The health ministry has now started working on amending the Drugs and Cosmetics Act to this effect.


“Indian patients may face quality issues without price benefit as intense competition among marketers will lead to incentivising a chemist,” says D G Shah, secretary-general of the Indian Pharmaceutical Alliance.

India, like most of other emerging markets, is predominantly a branded generics play with a 90 per cent share in the Rs 1-lakh-crore market. Which means that drug makers sell these off-patent drugs through their relationships with doctors. In developed countries such as the US, only patented drugs are sold under a brand, which is marketed through their ties to doctors. Off-patent drugs are sold only as pure generic, without using any brand name. It helps in making pure generics cheaper.

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It is this nexus between the branded generic makers and doctors that the Modi government wants to break, to bring down the prices for drugs. Last time the government had attempted something like this was under the Janta Party government in 1978. Then, the idea was shelved after the pharma industry challenged the order in court. 

Sujay Shetty, partner at consultancy firm PwC, said such a plan would be very difficult to implement. “With so many generic drug makers, how does one make a distinction based on quality.”

This is not the only move the government has taken to bring down the prices of pharma products. It has also brought about 200 drug formulations, including those for treating cancer, under the National List of Essential Medicines (NLEM), taking the number of such drugs to 716. With this, the government was able to bring down the price of cancer drugs by up to 85 per cent.  

“If the doctor prescribes only a generic name, it will be left to the chemist to decide which particular brand to push,” said Sarabjit Kour Nangra, vice-president of research at Angel Broking. “So the marketing focus of pharma companies will now have to shift from the doctor to the chemist,” said Nangra, pointing out that this change might be feasible in government hospitals but not on a pan-India basis. The government has so far not clarified the scope of its plan.

While the government is planning to make it mandatory for doctors to prescribe pure generics, its own record in procuring such drugs for its Jan Aushadhi Stores has not been good. “At any time, only 200 of the 600 drugs that the government planned to sell at the Pradhan Mantri Jan Aushadhi Store are available,” said S S Agarwal, former president, Indian Medical Association. The Bureau of Pharma PSUs of India (BPPI) is the nodal implementation agency for this programme.
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