Pharma stocks buzz as government mulls to control drug prices

With the government discussing a new mechanism to control drug prices in the country, most pharma stocks were buzzing on Monday. Stocks of pharma companies with higher domestic revenues were under pressure.

Various suggestions and recommendations are being reported in the media following government's ongoing deliberations with the national think-tank NITI Aayog and other government bodies overseeing the pharma sector.

Government's aim is to bring more medicines under price control. Under the current policy, government fixes the prices for drugs listed on the National List of Essential Medicines (NLEM). The prices for essential drugs are fixed by the government body, the National Pharmaceuticals Pricing Authority (NPPA).

While in the case of non-scheduled drug, the manufactures are entitled to a 10 per cent price increase every year, which automatically hikes up the price of several chronic and expensive medications, annually. There are talks of linking the pharma pricing index to the wholesale inflation index, which is expected to bring down the prices of these drugs in the country.

On the other hand, government has also decided to take legal and other measures to control the price of drugs for rare diseases in order to keep them affordable to a larger population.

The Pharma indices were, however, upbeat on Monday. At 10:56, S&P BSE Healthcare was at 12993.48, up 48.03 points or 0.37 per cent. While the leaner index, Nifty Pharma was at 8,276.95, up by 45.20 points or 0.78 per cent. Pharma major Dr. Reddy's was among the top gainers on BSE trading at Rs. 2,003.75  per share or up 3.21 per cent, while Glenmark Pharma was trading at Rs. 546.45 per share, up by 1.98 per cent.