India's Pharma Industry likely to take 5-6% price hikes this year

Despite the fact that the country's pharmaceutical pricing regulator has approved a 12% price increase for medicines on the National List of Essential Medicines (NLEM) in 2023, analysts and industry insiders predict that the overall domestic pharma industry will only see a 5-6% price increase. This is due to the market's increased competitive intensity.

According to Krishnakumar V, executive director and chief operating officer (CEO) of Eris Lifesciences, a domestic-focused pharma business, the NLEM segment suffered growth suppression of roughly 150 basis points this year due to price reductions from January to July. NLEM accounts for approximately 18% of the Rs 1.8 trillion Indian Pharma Market (IPM). According to Krishnanath Munde, associate director of India Ratings & Research (Ind-Ra), IPM had an average price increase of 5.2% from 2019-20 to 2022-23 (FY23). This is in contrast to the previous decade's average price increase of 3.2 percent (2013-14 through FY23).

Munde went on to say that IPM's price hike growth for the April-July period in 2023 was 5.3 percent. He emphasised that even if the National Pharmaceutical Pricing Authority (NPPA) allows a 10% price increase for the non-NLEM portfolio and a 12% price increase for NLEM products (2023-24, or FY24), the overall IPM is expected to see a 5-6% price increase due to increased competitive intensity.

Following the first quarter (Q1) results of FY24, pharma companies have started expressing concerns about the potential impact of NLEM. Sun Pharmaceutical Industries, the largest pharma firm in the domestic market in terms of market share, acknowledged after Q1FY24 that growth had been subdued due to the NLEM impact. Kirti Ganorkar, CEO of India business at Sun Pharma, discussed the impact of NLEM on the quarter’s performance in the domestic market, expressing optimism about future growth. “NLEM was also announced in the months of December and January, and the full impact has come in this quarter. However due to intense competition, companies are unlikely to take the full price hike. The CEO of a pharma company stated, “Currently, the competition for market share is high, leading companies to adopt an aggressive pricing strategy. "Additionally, there is an increase in trade generics, which are cheaper medicines. "Therefore, we do not expect everyone to take a 12.1 per cent price hike in drug prices.”