New Delhi: Proposed cap on trade margins will not hurt pharma cos

New Delhi: India's proposal to cap the trade margins available to drug distributors will not significantly hurt the profitability of pharmaceutical companies, Fitch Ratings said on Wednesday. Trade margin is the difference between the price at which manufacturers/importers sell to stockists and the price charged to consumers.

"India's proposal to cap trade margins will not significantly hurt the profitability of pharmaceutical companies, as the proposal does not restrict the margins at which pharma companies sell to distributors," Fitch said in a statement.

Citing media reports Fitch said, the National Pharmaceutical Pricing Authority is making progress in reaching a consensus with pharma companies and distributors to cap the trade margins for drugs that are not under explicit price control.

The proposal builds on the regulator's success in cutting cancer drug prices by as much as 85 per cent following a similar exercise to cap trade margins, it added.