Essential medicines to be slightly costlier from April 1

Medicines included in the National List of Essential Medicines (NLEM) will see a slight price increase from April 1st.

The adjusted prices cover more than 800 medicines on the National Essential Medicines List. Scheduled drug price changes are allowed once a year. From April 2024, companies will be able to raise the tax rate by 0.0055%.

Every year, the National Pharmaceutical Pricing Authority (NPPA) publishes a price ceiling calculated based on the previous calendar year’s Wholesale Price Index (WPI). This will limit the percentage by which drug companies can increase their portfolios under the NLEM from April.

“Based on Wholesale Price Index (WPI) data provided by the Office of Economic Advisor, Bureau of Intra-Industry Trade, Ministry of Commerce and Industry, the annual change in WPI is calculated to be (+)0.00551% for the calendar year. 2023 over the corresponding period of 2022 ”, says a notification from the National Pharmaceutical Pricing Authority (NPPA).

Essential medicines are those that meet the priority medical needs of the majority of the population. The list of essential medicines should be country-specific and address the population’s disease burden and commonly used medicines at primary, secondary and tertiary health care levels. Medicines listed on the National List of Essential Medicines (NLEM) must be available at affordable prices and with reliable quality. NPPA regularly updates and maintains a list of products under the NLEM.

Prices are expected to rise by 12 percent and 10 percent annually in 2023 and 2022, which would be marginal increases for the industry. But experts say it may not be a huge blow to publicly traded drug companies. “NLEM drugs do not constitute a large portion of Indian pharma companies. Our non-NLEM portfolio constitutes around 80 per cent and the NLEM portion of our domestic sales is around 15-20 per cent.” said Bhavesh Shah, Managing Director and Head of Investment Banking at Equilus.

The Indian pharmaceutical market grew by 6.8% in calendar year 2023. The main growth factor in 2023 was price, as sales volume decreased by slightly he 0.9%. According to a recent sectoral update by HDFC Securities, the price benefits from the 12% hike in NPPA prices have started to be reflected in the results of Indian listed companies for the fiscal year ending September 2024.

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