NLEM 2022: Analysts see no major impact pharma companies' growth

The latest revision of the National List of Essential Medicines (NLEM) that included 34 new drugs and removed 26 is unlikely to have a noticeable impact on the domestic pharmaceutical market, felt analysts and industry insiders.

The National Pharmaceutical Pricing Authority (NPPA) controls the ceiling prices of medicines included in the NLEM, based on the wholesale price index. These are called scheduled drugs. All other drugs (non-scheduled drugs) are allowed to take up to 10 per cent hikes every year.

The 2022 revision of the NLEM came after seven years. Most drugs that have been now brought into the NLEM include anti-infectives, anti-diabetics, anesthetics, etc.

A Mumbai-based analyst said: “This is overall a benign list. It is virtually the same list that was shared on September 3, 2021.”

He said GSK could be the worst hit (cefuroxime and mupirocin), while Sanofi may need to bear some price impact on insulin glargine. “Companies like Cipla (amikacin, montelukast), Alkem (cefuroxime, dabigatran), and Glenmark (itraconazole) may witness a minor impact, if any,” the analyst added.

The NLEM committee headed by Balram Bhargava, director general of the Indian Council of Medical Research (ICMR), drafted a new NLEM. ICMR last year submitted a draft to the health ministry, which then reviewed and reworked the list.

In a March report, Systematix Institutional Research said the September list (which included 39 drugs and excluded 16 drugs from the NLEM 2015) is unlikely to have a noticeable impact on growth of Indian pharma companies.

The September 2021 list had 397 drugs and brought in an incremental 3.4 per cent of the domestic pharma market’s revenue under price control. Roughly 17-18 per cent of the Rs 1.7-trillion domestic market was under the NLEM 2015.

But the final list -- now released as the NLEM 2022 -- has 384 drugs, and thus the overall impact on Indian drug firms is not likely to be significantly different from the NLEM 2015, analysts felt.

“On a blended basis (NLEM and non-NLEM), price growth in the Indian Pharma Market (IPM) is seen at 5-6 per cent YoY over the past three years. This is despite a 10 per cent price hike allowed for non-NLEM products (over 80 per cent of IPM). India Ratings expects overall NLEM exposure to IPM will be within 20 per cent of IPM over the medium term,” said Krishnanath Munde, associate director, India Ratings and Research, adding that there will be no material impact from recently added products in the NLEM.

The pharma industry said the NLEM 2022 has tried to address the issue of antimicrobial resistance. “The NLEM 2022 is the result of extensive consultation with all stakeholders in health care, including experts in the field. This list strives to strike a balance between patient centricity, public health concerns, future policy direction, and thrust, going forward. Antimicrobial resistance is a critical issue and the NLEM 2022 has attempted to address it,” said Sudarshan Jain, secretary general, Indian Pharmaceutical Alliance (IPA), an umbrella body of top pharma companies in the country.

The bulk of the inclusions in the NLEM 2022 are in the anti-infective category, which constitutes roughly 13 per cent of the domestic market.

1. NLEM 2022 added 34 drugs and removed 26 drugs from NLEM 2015
2. Anti-TB, anti-HIV, Hepatitis B, C, several antibiotics were added
3. Four patented drugs (TB, HIV, Hepatitis) also became part of the NLEM 2022
4. Common gastro-intestinal drug ranitidine was removed from the list
5. Insulin Glargine and antidiabetic drug teneligliptin were added
6. 4 cancer drugs part of NLEM 2022
7. Disinfectants like bleaching powder were taken off the list