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| Reckitt, regulator lock horns over Dettol pricing |
| Joe C Mathew & Priyanka Singh / New Delhi Oct 14, 2011, 03:54 IST |
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The Indian subsidiary of British consumer goods major Reckitt Benckiser has locked horns with medicine price regulator National Pharmaceutical Pricing Authority (NPPA) over rejection of price approvals for newer pack sizes for Dettol antiseptic lotion.
The company has challenged the retail price fixed by NPPA, saying the agency’s pricing calculation failed to recognise the rise in raw material costs, despite being pointed out by Reckitt in its price revision application. Failing to sort out its issues with NPPA, the company has approached the Department of Pharmaceuticals, NPPA’s administrative head, seeking a review.
The company did not respond to the questions posed by Business Standard.
Dettol antiseptic, with over Rs 600 crore annual revenues, is among the list of 74 scheduled medicines whose prices are directly decided by the NPPA. It is a market leader with 85 per cent share in the antiseptic segment in India. The other significant player is Johnson & Johnson's Savlon with 13 per cent.
DETTOL ANTISEPTIC LOTION PRICING
(Price for a pack of 12 units) |
Bottle
size |
Before
revision |
Price after March
notification |
| 12 x 50 ml |
120.80 |
127.86 |
| 12 x 100 ml |
190.98 |
203.42 |
| 12 x 200 ml |
333.00 |
353.79 |
| 12 x 500 ml |
734.60 |
787.40 |
| 12 x 5 litre |
6671.84 |
7276.46 |
| Source: nppa approved price list (exclusive of taxes) / Rs |
Companies can apply for price revision of such products six months after the medicine regulator fixes the prices.
In Dettol’s case, Reckitt is revolting against a decision taken by NPPA this March on the basis of a price revision application it had submitted in August 2010. The company had applied for prices for Dettol lotion for its traditional packs as well as new pack sizes 60 ml, 110 ml and 210 ml.
NPPA however, ignored Reckitt’s plea for new packs and provided a marginal price increase, much lower than what Reckitt had demanded on 50 ml, 100 ml, 200 ml, 500 ml and 5 litre bottles.
Reckitt feels the agency did not consider the upward changes in raw material cost during the seven months NPPA took for the decision, even though the company had provided a revised raw material price list in January.
Though NPPA has not explicitly barred the use of the “unapproved” packs of Dettol, the authority has conveyed to Reckitt that since there was no prescription dosage for use of Dettol, there is no justification for manufacturing and marketing it in pack sizes of 60 ml, 110 ml and 120 ml.
In a submission to the Department of Pharmaceuticals, Reckitt stated its decision to increase pack size irrespective of NPPA’s negative response was in the interest of the consumer. The company said its own market survey found the use of Dettol among Indian households had gone up by 26 per cent in three years (2006-08) and, hence, the need for bigger pack sizes.
The company said it has not discontinued the 50 ml pack as it would have compelled consumers to buy the next in line – 100 ml pack, irrespective of one’s requirement. It also pointed out dozens of instances where pack sizes similar to that was sought by them were approved by NPPA, irrespective of its prescription dosage status.
The Department of Pharmaceuticals, which falls within the ministry of chemicals and fertilisers, has the powers to reverse NPPA orders. There have been instances in the past where NPPA has issued higher mark ups for imported medicines on the basis of ministry directive.
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