The Indian government is reportedly close to withdrawing the right of drugmakers to set their own prices for innovative new medicines. Earlier this year, the National Prescription Pricing Authority had warned the government that it believed companies were abusing this freedom by setting the initial price at over-inflated levels, in order to get round the requirement that the price of a new drug should not rise by more than 10% in a single year.

Market surveys by the Authority have found widespread abuse of the system, and local reports now say that multinational drugmakers have also been getting round this requirement by importing innovative new medicines rather than manufacturing them locally, as doing so would have allowed the authorities to check on the drug’s production costs.

Around three-quarters of products on India’s pharmaceuticals market are not under price control. The NPPA has now however recommended to the government that marketing approvals, which are granted by the Drugs Controller General of India or the individual states’ own authorities, should be conditional on acceptance of a price set by the Authority.

India’s pharma’s “vast economic opportunities”
Meantime, research company Boston Analytics has estimated that India’s pharmaceutical outsourcing market will grow at a compound annual rate of 37.5% in the period to 2010, reaching a value of $3.3 billion within the next two years. Moreover, it says that the value of local production of active pharmaceutical ingredients and generic drugs will rise 13.5% a year over the same period, and that the domestic market will be worth $10.3 billion by 2010.

This “enormous potential” will be driven by fast-rising local demand for medicines due the country’s increasing population, ever-expanding consumer base in the middle and upper income brackets, the need for an improved healthcare infrastructure and Indian companies’ reverse-engineering skills, says the report. It also points out that India has 75 pharmaceutical production plants which are approved by the US Food and Drug Administration – the highest number in any country outside the USA.