Pfizer's ($PFE) top official in India isn't happy about the government's recent pharma-related moves. In fact, Managing Director Kewal Handa, who heads up Pfizer India, said the latest push to control prices on 348 essential drugs would hamper pharma to the point at which the industry would find its growth choked down.
The Indian pharma sector was growing at a 20% clip back in the spring of 2010, but it has since slowed to 13% growth, Handa said. "[A]s it is we are seeing a low growth phase, and with the coming National List of Essential Medicines, the industry would slip into a semi-recession stage," he said.
Already, pharma companies are facing new rules on foreign investment in the Indian industry. Buyouts by multinational drugmakers, particularly the Abbott Laboratories ($ABT) acquisition of Piramal's domestic pharma business, triggered calls for limits on similar deals. After some debate, government officials set a new policy that, while eschewing limits on some foreign M&A, would put other deals through government review. Handa said the new rules introduce "uncertainty" into the market. "There was no need to panic," he told Business Line. "Pharma will go through these phases; every country goes through phases."
But it's the price-control plan that really has Handa up in arms. The Indian government already controls prices on drugs that account for about one-quarter of the market. Officials want to expand that to at least 348 essential meds, which they say would involve 60% of domestic drug sales. Handa, however, figures the controls would actually amount to 75% of the market. Such broad control would end up "commoditizing the industry," failing to recognize differentiation in quality and hampering innovation. "[T]hat's not fair," he said.
- read the Business Line interview