According to the minutes of the meeting of the National Pharmaceutical Pricing Authority, the central government has approved to hike the cost of essential drugs by 12.12 per cent from April 1. This will be the highest-ever annual price hike announced.
The hike from April 1 will impact over 1,000 formulations of essential medicines and 384 drugs due to a sharp rise in the Wholesale Price Index.
The annual hike in the cost of drugs listed in the National List of Essential Medicines (NLEM) that are used in various government health programs and sold directly to retailers are based on the WPI.
The officials at the National Pharmaceutical Pricing Authority citing the office of the economic adviser in the ministry of commerce said that the WPI between January 2022 and January this year was at 12.12 per cent.
This is for the second year in a row that the prices of essential medicines have gone up over 10 per cent. In 2022 the annual hike in prices of essential drugs were at 11 per cent.
According to a report by the BQ Prime the industry was expecting a price hike in the NLEM due to rising costs of imported raw materials, packaging materials and plastic since the pandemic. The price cap for drugs that are not mentioned under this list will continue to stay at 10 per cent for this financial year.
Which companies will benefit from the hike?
According to September 2022 data of All India Origin Chemists and Distributors Limited, NLEM portfolio consists of 17 per cent of the overall Indian pharma market sales. In this the contribution of the top 25 companies stands in the range of 5 to 49 per cent. The price hike will likely benefit the companies that have a 15 to 49 per cent exposure to domestic sales.
The move will be positive for most companies under the list but the benefits for the companies that were included under the revised Schedule I of the DPCO would be comparatively lesser reported BQPrime quoting Vishal Manchanda, a pharma analyst with Systematix.
NLEM drugs are used to treat common conditions like fever, diabetes, cardiovascular diseases, tuberculosis, blood disorders, cancer, anemia, hypertension and more.
The list includes paracetamol and antibiotics like azithromycin and anti-anemia prescriptions like vitamins, minerals and folic acid.
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