Centre plans staggered capping of trade margins on drugs: Report

The Centre is planning to cap trade margins on drugs in stages, starting with 45 percent and then lowering it to 30 percent, reports Business Standard.

The trade margins may be rationalised for one category of medicines at a time, the report said.

The pharmaceutical industry has given in-principle approval for the plan, and are discussing the move with the government, a source told the paper.

Moneycontrol could not independently verify the report.

But Cipla, Alkem, and some other pharmaceutical majors have opposed the proposed move since they have a significant business in unbranded generic medicines, the report added.

Trade margins for branded generics are standardised (currently around 30 percent), while those on unbranded generics vary.

At present, around 19 percent of the Rs 1.3 lakh crore domestic pharmaceutical market is under price controls.

For scheduled medicines, the trade margins are 8 percent to the stockist and 16 percent to the retailer. For non-scheduled products, it is 10 percent and 20 percent respectively, the report said.

The National Pharmaceutical Pricing Authority (NPPA) sets the cost of scheduled drugs, while the prices of non-scheduled drugs are permitted to rise by as much as 10 percent annually.