Regulatory Focus™ > News Articles > India Poised to Restrict Price Hikes, Cut Margins

India Poised to Restrict Price Hikes, Cut Margins

Posted 05 January 2012 | By Alexander Gaffney, RAC 

The Indian National Pharmaceutical Pricing Authority (NPPA) will limit price hikes by foreign drug companies by more closely scrutinizing the profit margins of companies that declare higher production costs, according to a reporter for the Economic Times of India.

Imported brands are currently restricted to selling drugs above their production costs by anywhere between 35-50%, depending on the presence of generic market competition.  This price ceiling is known as the maximum retail price (MRP).

Previously, manufacturers could get around the MRP by stating that they had higher production costs.  This will no longer be acceptable, according to a senior NPPA official.  The agency will restrict the profit margins of manufacturers who declare the higher production costs unless they can be proven to be genuine.

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