Bulk of pharma growth came from price hikes, shows data

The National Pharmaceutical Pricing Authority (NPPA) has fixed ceiling prices of over 870 formulations that are part of the National List of Essential Medicines (NLEM) through an order on March 30, allowing a 10.76 per cent rise linked to the Wholesale Price Index (WPI). This is the highest price rise allowed for scheduled drugs (those part of the NLEM) by the pricing regulator since the Drug Price Control Order, 2013, came into effect. The average increase in prices was 3.1 per cent in the past five years.

An analysis by Systematix Research showed that among the three components of growth for pharma companies — volumes, new product launches, and prices — price growth has taken over volume to become the largest growth driver.

Contribution of volume growth in overall Indian Pharmaceutical Market (IPM) has reduced significantly to 20 per cent in March 2020 versus 34 per cent in March 2016, while the price growth has contributed 55 per cent versus 34 per cent for the same period.