Movement in pharmaceutical stocks next week would rest on the Supreme Court's decision on the drug pricing policy. Before the apex court's decision Wednesday, the counters in the pack are seen down on the first two days of the week as some industry players feel the government might go with the cost-based pricing formula that, many say, is being favoured by the court. The Supreme Court had on Wednesday asked the government not to alter the existing drug price structure, sparking speculation about the impact of the policy unveiled last week by the government. The ministerial panel on drug pricing had proposed to bring all 348 drugs in the National List of Essential Medicines under price control, which previously had only 74 drugs. As per the proposals of the ministerial panel, the prices of the drugs will be market-based, that is, fixed after taking the weighted average price of all brands having at least 1% or more market share by volume.
While pharmaceutical companies are scouting for a market-based pricing formula, the apex court's directive to go back to cost-based pricing could be a big setback for the drug companies. If the cost-based pricing policy is put in place, many small pharmaceutical companies might be completely wiped out from the industry in a couple of years.
