Generic drug mandate execution lagging: Fitch

New Delhi: The government guidelines mandating physicians prescribe only generic drug names face execution challenges and are unlikely to impact profitability of pharmaceutical companies in the domestic market, Fitch Ratings said on Thursday. The domestic pharmaceutical market is mainly a branded generics market, in which pharma companies sell off-patented drugs under their own brand names with varying prices, Fitch said in a statement.

A sizeable erosion in branded generics sales share could affect Indian pharma companies’ profitability, as sharply lower average prices will outweigh potential benefits from lower marketing costs, it said.

“Even so, we think the new guidelines are unlikely to trigger an immediate shift away from branded generics. We believe the implementation faces practical challenges as India’s less stringent drug quality norms may lead to variability in drug quality and efficacy among various manufacturers,” it noted.

Besides, the mandate may shift the decision-making process about the choice of drug manufacturer from physicians to pharmacists who may not be adequately qualified or lack alignment with the interests of patient safety and drug efficacy, it said.