Pharmaceutical Industry Needs Deregulation and Decontrol

Economic Review, August 1992 | Go to article overview

Pharmaceutical Industry Needs Deregulation and Decontrol


Mr. Misbahuddin Khan Chairman PPMA made a plea that pricing policy in the pharmaceutical industry should be deregulated. According to Mr. Khan competition would keep prices at reasonable level. Following are the excerpts:

Q. In the light of the Government policy of privatisation and attracting foreign investment what role do you propose for the PPMA during the year 1992-93?

A. Like the rest of the communities pharmaceutical community also welcomes Government decision of privatisation policy and attracting foreign investment. As you know there is considerable foreign investment in the pharmaceutical industry already. Private sector already controls almost 98% of the pharmaceutical industry. But I feel certain actions are necessary on the part of the Government to favourably attract foreign investment in the field of fine chemicals and raw material for the pharmaceuticals industry, which is altogether a vacant field in the country.

Q. What further actions do you propose in order to attract further foreign investors in the pharnaceutical industry?

A. Pharmaceutical industry is the only industry in the country, which is highly regulated by the government and needs immediate deregulation and decontrol for its development particularly the selling prices should not be controlled when there is no control on input materials. There are already ample industries which cannot only cater the entire need of the country, but also can play vital role in foreign exchange earning. As I already said, the field for basic manufacturing is altogether vacant for which necessary steps be taken for foreign investment.

Q. But don't you think that this will mean ever-escalating retail prices of medicines and life saving drugs?

A. No, I don't think so. On the contrary the tough competition among many pharmaceutical companies manufacturing similar products and forces of supply and demand will force them to keep their retail prices at substantially low and reasonable levels and at the same time maintain the high standards of quality. We are of the opinion that Government should control prices of the essential and life saving drugs and those where adequate competition does not exist.

Q. In that event what fate you see for the formula of leader price and the uniformity prices?

A. There is not need for such formulae. In my opinion economic force should determine the normal selling price. However as said earlier, if government wants to control the prices of essential life saving drugs, there should be no discrimination on fixing prices for more than one manufacturer. One leader price or maximum retail price should be fixed and let the economic forces compel the manufacturers to determine their own selling prices. …

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