Pharma Shares Gain as Government Curbs Regulator's Power
Shares in pharma companies gained on Wednesday as the government of India withdrew the power of National Pharmaceutical Pricing Authority (NPPA) to set prices of non-essential medicines.
Sun Pharma and Ranbaxy gained nearly 2 per cent whereas GlaxoSmithKline Pharmaceuticals and Divis Lab were up over 1 per cent each. Glenmark Pharmaceuticals was also up around 1 per cent.
The government of India's decision came as a big relief for pharma companies.
Due to this order 0.7 per cent of Sun Pharma and Ranbaxy's combined sales in India will be out of the price control of NPPA whereas 1.5 per cent of Torrent and 0.7 per cent of Lupin's India sales will get relief.
NPPA had capped prices of 108 non-essential drugs in July to improve its affordability, but the decision was greeted with protests and has been challenged in courts in India as prices of generic drugs are already low in India compared with other markets.
However the recent decision of government will not be applicable retrospectively. So the July decision of NPPA to cap prices of 108 non-essential drugs still holds good, a senior official of NPPA told Reuters.
(With inputs from Reuters)
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