ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Ravinder JhaSubscribe to Ravinder Jha

Prices of New Pharmaceuticals in India: A Cross Section Study

There is an ongoing debate about the rationality of price controls in a regime where drugs can be manufactured through alternative processes as was the case in India before 2005. In a regime of only process patents, competition was expected to bring prices down. However, even when there was an absence of intermolecular competition, firms have been involved in intramolecular competition to charge varying levels of prices for the same drug. This study examines the role of inter- as well as intramolecular competition, apart from the extent of therapeutic advantage that a new molecule offers, in the determination of the level and rate of change in drug prices. In a regime where product patents are also recognised and the competitive pressures are going to be limited, the need for price monitoring and control would be greater for therapeutically superior drugs. Also drugs which are predominant in their class for specific indication need to be monitored.

Options for Indian Pharmaceutical Industry in the Changing Environment

With the shift to a strong patent law, Indian pharmaceutical companies are rapidly shifting their focus to the generics market of the developed world. But even as India has become a net exporter of pharmaceuticals, import dependence on active pharmaceutical ingredients has steadily increased over the last 10 years. As far as the Indian affiliates of the multinational pharmaceutical companies are concerned, their shares of both the active pharmaceutical ingredients and formulations are declining and their "investment" preferences have shifted towards financial securities. A process of consolidation through mergers and acquisitions has been underway, which apart from increasing market concentration, has been a key element of firm strategy to tap business opportunities along the value chain in the domestic as well as the overseas markets. In the field of R&D, with no Indian pharmaceutical company being equipped to take a potential drug from the investigational stage to the stage of final market launch, collaboration with multinational corporations is the norm, resulting in biases in the choice of therapeutic areas towards lifestyle-related diseases.
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