NPPA's unilateral stand-off unhealthy for sector: Biocon

Written By Unknown on Selasa, 29 Juli 2014 | 23.25

CII National Committee on Biotechnology Chairperson and Biocon CMD Kiran Mazumdar Shaw has written an open letter to the Prime Minister, seeking his intervention over "unilateral fixing" of drug prices by NPPA .

The government has to behave like a partner with the industry to address the healthcare issues.

Kiran Mazumdar Shaw

CMD

Biocon

The Indian Pharmaceutical Alliance (IPA) and the Organisation of Pharmaceutical Producers of India (OPPI) have taken the National Pharmaceutical Pricing Authority (NPPA) to court over a recent pricing order mandating price ceilings of several drugs.

Infact CII National Committee on Biotechnology Chairperson and Biocon  CMD Kiran Mazumdar Shaw has written an open letter to the Prime Minister Monday.

In her letter she has sought PM Narendra Modi's intervention over "unilateral fixing" of drug prices by NPPA saying the exercise based on "an inequitable formula" has done collateral damage to indigenous industry.

Below is the transcript of Kiran Mazumdar-Shaw's interview with CNBC-TV18's Shereen Bhan.

Q: The news that we have broken today is that the IPA and the OPPI have now decided to move court and have served a legal notice on this issue of price control. However our sources within the government and within the NPPA say, that the entire national list of essential medicines is under review and we are likely to see a new list by July 2015. It is implicit perhaps in the conversation that we have had that may be that list is going to be widened even further, your first reaction?

A: This kind of unilateral stand-off that is being created by NPPA is extremely unhealthy for such an important sector like the Indian pharma sector. The whole contentious issue that is being debated by the Indian pharma industry is the high handed unilateral measures taken by NPPA in arriving at the so called price ceiling formula. That is what the whole objection is about. Price ceiling per se is not the issue.

Q: What we are also being told is that this new price review order which was issued on July 10 is an interim arrangement, it is valid only for a year up until the government formalizes and puts forward the new list of National List of Essential Medicines which is expected in July 2015 making para 19 of the DPCO irrelevant perhaps?

A: The whole point is there has been no stakeholder consultation on arriving at an equitable formula. Today they have taken a simple average formula which cuts across different kinds of pharmaceutical companies from small to large, there is no semblance of reference to any of return on investments made by these kind of companies, there is no comparable basis on which these prices have been even referenced. So, there is a huge flaw in the way this price ceiling has been arrived at and that is really the contentious issue.

The government has to behave like a partner with the industry to address the healthcare issues. There are many market mechanisms available to bring in price discounting like government tenders where you are clearly seeing huge discounting on these very drugs.

Q: You have actually written and open letter to the Prime Minister, any response yet?

A: No response as yet. I am hoping that I will get a response soon.

Biocon stock price

On July 28, 2014, Biocon closed at Rs 465.15, down Rs 14.9, or 3.1 percent. The 52-week high of the share was Rs 553.70 and the 52-week low was Rs 312.00.


The company's trailing 12-month (TTM) EPS was at Rs 15.84 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 29.37. The latest book value of the company is Rs 120.89 per share. At current value, the price-to-book value of the company is 3.85.


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