Drug Regulatory Authority of Pakistan (DRAP) has notified an increase in the prices of 146 medicines, which are part of the National Essential Medicine List (NEML) and which fall under the hardship category, through a back-dated notification issued on 19 February 2024. The proposed price increase was sent to the federal government several months ago after pharmaceutical companies refused to manufacture them due to constraints on financial viability and chronic shortage in the market.
What are hardship cases?
As per the Drug Policy 2018, a hardship case of a drug means a situation in which a manufacturer or importer of a drug cannot recover its costs and make a profit margin as per the formula set out in the policy. Notably, under the Drug Policy 2018, hardship cases will receive a price hike once every three years after assessment.
The last price hike for hardship cases was granted in 2020
The last price hike for hardship-category drugs was approved in October 2020 for 94 lifesaving medicines. In the current move, out of the outstanding 262 hardship cases, prices of 146 were increased as they were part of the essential medicines list. The prices of remaining medicines would be increased by pharma companies themselves after price deregulation by the government. Pharma companies with a larger proportion of essential medicines vs. non-essential would benefit from this – or those with greater hardship cases. These potentially include SEARL and GLAXO.
Price hike aimed at lifesaving drugs
The price increase applies to certain life-saving drugs, injectables and oral antibiotics, drugs to treat inflammation, psychiatric conditions, autoimmune diseases, cancer, cardiovascular diseases including hypertension, fungal illness, allergies, diabetes, synthetic hormones for female health conditions etc. The list also includes vaccines for conditions like MMR and typhoid, nebulizing solutions, iodinated contrast agents for diagnostics and anaesthesia drugs.
Expect a broad-based improvement in sector profitability.
Today’s price increase is independent of the decision taken yesterday to deregulate prices for non-essential medicines by the Federal caretaker cabinet. We expect a broad-based improvement in the sector’s profitability upon these two regulatory changes. AGP remains a top pick with a TP of PKR100/sh.
Courtesy – Intermarket Securities Limited.
