When Cipla, the second largest pharma company in India, announced that it is slashing prices of three anti-cancer drugs used to treat brain, lung and kidney cancer it sent shockwaves in the pharma world.
Cipla’s move will trigger other companies to revaluate their own strategies and could see a sharp fall in oncology medicine prices. With one million new cancer cases in Indiaevery year now, this seems to be a welcome move.
Y.K. Hamied, Chairman and managing director Cipla said the unexepected response to the price cuts including its generic version of Bayer’s Nexavar, prompted Cipla to consider further moves.“Our agents and partners in Africa and other countries have written to us: ‘are you extending your price reductions to us?’” Hamied said in an interview.
Hamied has long been a visionary as far as generic drugs are considered. Cipla made headlines in 2001 by producing anti-HIV drugs for sale in Africa which cost less thatn $1 per day.. Hamied said Cipla was working out details of how to cut prices on more of the 23 cancer drugs it makes. “I am now sitting with my boys to see what reductions we can make in the entire range of cancer drugs. We are making some calculations about pricing, costing and other aspects.”
While Cipla will analyse the impact of its move on doctors and the market, before it slashes prices of more cancer drugs, other players in the Rs 1,500-crore oncology market such as Glenmark, Natco Pharma and Hetero Drugs said that they would take a decision over the next few days.
“It may not trigger a price war but definitely there will be some changes. The oncology market in India has had price wars taking place irrespective of official slashing of MRPs, since approximately 70% of business is driven through institutions which have tenders as a pre-requisite ,” experts say. Also, companies offer substantial discounts on the marked prices to doctors and institutions, an executive with a leading company said.
However, there is a section of industry that feels that prices is not the only criteria and quality needs to be maintained especially for drugs that treat critical illnesses like cancer. There is a feeling among industry experts that margins won’t really be affected because oncology drugs total up to less than 5% of the total sales of major pharma giants.
This price slashing is a direct consequence of the compulsory license granted Natco in March by the Patent Office which allowed it replicate Bayer’s Nexavar decreasing the price by almost 97%. Swiss drug maker Roche responded to this by announcing that they intended to sell generic versions of two of its cancer drugs in India and now Cipla’s made its move. However, whether this price slash will really help most Indians is a different matter because even these cut-price rates are too expensive for most Indians.