Profit margins at the level of earnings before interest, tax, depreciation and amortisation at GlaxoSmithKline’s Indian unit fell to 20.7 percent in 2013 from 31.3 percent the previous year, according to Thomson Reuters data.
“Most companies have taken the last round of price cuts in their stride, (but) they are not happy about it,” said Sujay Shetty, India pharmaceuticals and life sciences leader at consultancy PricewaterhouseCoopers.
“I don’t think the industry would be receptive to another round of price cuts.”
Prices of the generic drugs sold in India are already low compared with some unregulated markets and the addition of more drugs in the price cap list would pile more pressure on the companies’ revenue, industry officials said. The price for GlaxoSmithKline’s antibiotic Augmentin in India dropped 44 percent for a packet of six tablets after it was included in the price cap list last year.
A GlaxoSmithKline spokesman in London said the company would not comment on the “speculation” that more drugs could be added to the price cap list, but said it supports the government’s “intention to increase affordability of essential medicines for patients who need them.”
Pharmaceutical sales in India, a key emerging market with sales of patented drugs in Western countries slowing, recorded about 6 percent growth in 2013-2014 – its lowest ever – mainly due to price controls, according to research firm Crisil.
Pricing pressure was a factor in researcher IMS Health projecting India will be the world’s 11th biggest pharmaceutical market by 2017, from 13th in 2012, rather than eighth by 2016 as forecast less than two years ago. (Reuters)