Govt Extends Tenure Of Policy On Penicillin-G

The government has extended its Penicillin-G policy, which bans imports and has caused domestic prices to be higher than foreign rates. The policy will continue for the next three months.

The drugs industry, which was expecting a review of the Pen-G policy on grounds that it was ineffective, is unhappy at the move of the ministry of chemicals & fertilisers. Under the policy, they cannot access imported Pen-G, which is cheaper by a third. While official domestic prices are around Rs 1,000 per kg, foreign rates are about $17 (Rs 595) per kg.

Official sources attribute the continuation of the policy, despite obvious flaws, to the uncertain political situation which is preventing a tough decision. If imports are allowed, what will happen to Indian companies who enjoy exclusive licences to produce Pen-G, the sources said. International prices go through a cycle, they might rise again very soon and domestic prices may become cheaper.

 

But industry sources do not expect a fall in the medium term due to virtual dumping by Chinese drug companies. They complain that in spite of the ban on imports, substantial Chinese Pen-G is being brought in the guise of some other drugs.In spite of a ban on import of Pen-G, the domestic price has shown a continued fall which has been most pronounced since the beginning of the year. Though Pen-G is under price control, its market price is about Rs 300 below the official price of Rs 1,000 per kg.

Industry sources said the falling price is due to overcapacity in the domestic industry and the ban on Pen-G imports, imposed in mid-1996 has not helped hold the price line.

Even the shutdown of the public sector Indian Drugs and Pharmaceuticals limited (IDPL), one of the largest producer of Pen-G has not led to a cutback on accumulated stocks.

The Industry sources said imports from China by 100 per cent export oriented units, who were exempt from the Pen-G import ban was one of the main reasons for the slump in the domestic market.

The sources said a part of the imported Pen-G was being diverted to the domestic market to take advantage of the lower price.

The fall in Pen-G price would soon start reflecting in prominent brands of antibiotics very soon, the sources said adding that a marginal fall in the prices of Pen-G based formulations had already started by small manufacturers.

In mid-1995 the government licensed five private sector companies, Max GB, Alembic, Torrent Gujarat, J K Pharma and the joint sector Spic. Substantial production by these companies to take advantage of the higher Indian prices compared to the international rates is also cited as one of the reasons for excess availability.

The sources said the current demand is in the region of 4,000 mega million units (mmu) while the supply was at least 1,500 mmu in excess. This is after the government carefully considered the domestic demand and supply situation before licensing companies in the private sector.