Views on NPPA update: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - Pharma, Angel Broking) on NPPA update:

"It has been reported that in its continued effort to make companies adhere to practices, the drug price regulator National Pharmaceutical Pricing Authority (NPPA) has asked 19 out of 100 companies to register for online database, failing which they have to appear in person before the NPPA member/secretary with a valid reason for not doing so.

The 19 companies include Wockhardt, Ipca Laboratories, British Biological, Danone, Dabur India, Indoco Remedies and Alkem Laboratories. Last September, the NPPA had asked all pharma companies to register online with Integrated Pharmaceutical Database Management System (IPDMS).

In a notification in September 2014, the price regulator had said that availability of reliable database was a necessary pre-requisite for carrying out the functions of price fixation and price revision in respect of scheduled drugs, price fixation in respect of new drugs. It was also needed for monitoring the production and availability of scheduled formulations as well as the active pharmaceutical ingredients contained in the scheduled formulations. Also for monitoring the prices of non-scheduled formulations. With the transition from DPCO 1995, which followed cost-based mechanism for price fixation, to the DPCO 2013, which follows market-based mechanism for price fixation, reference data and source of market based data has assumed critical importance. Hence the initiative and directive.

We believe that such issues do crop up, when new initiatives are taken. However given the importance of the initiatives, we believe the companies will have to comply with the same. Hence we don't see this as any negative for the companies or Industry and maintain our recommendations, with Dr Reddys, IPCA Lab and Sun Pharma being our top picks for the sector.

Source : Equity Bulls

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