The National Pharmaceutical Pricing Authority (NPPA) on Monday announced the withdrawal of an internal guideline to fix prices of 108 non-scheduled formulations.

Though the decision is disappointing for consumers, mainly cardiac and diabetes patients, who were benefiting from lower drug prices, the move by the price regulator is unlikely to affect them, according to market experts.

The move will, however, result in a positive outcome for the pharma industry, which had earlier expressed disappointment over the NPPA's decision and moved court against the authority.

The NPPA in July fixed prices of 108 drug formulations, mainly in the therapeutic groups of diabetes and cardiac disease, which are not part of the national list of essential medicines (NLEM).

The market size of these non-scheduled drugs is around Rs5,500 crore out of the total domestic pharmaceutical market of around Rs77,000 crore. The list of drugs that came under price control included Gliclazide, Glimepiride, Sitagliptin, Voglibose, Amlodipine, Telmisartan and Rosuvastatin, Heparin and Ramipril. These drugs had witnessed a price reduction from 10-15% to as high as 35%, with an average reduction of around 12%.

In an announcement on July 10, the NPPA said in its website that it has approved objective guidelines for fixation/revision of prices of non-scheduled drugs showing extreme inter-brand price differences, under paragraph 19 of Drug Price Control Order (DPCO) 2013.

But on Monday, the price regulator issued a notification saying it had been withdrawn with immediate effect.

SV Veerramani, president of Indian Drug Manufacturers' Association (IDMA), said: "In July, the price regulator included the non-scheduled 108 formulations under price cap. These are not a part of the NLEM, 2011. The regulator has withdrawn the internal guidelines but prices depending on the guidelines has not been withdrawn, though subsequently they will. The impact of this will not be anything significant for patients."

In the absence of a price cap, Sanofi is expected to see a gain of around Rs139 crore, followed by Zydus Cadila (about Rs40 crore), Ranbaxy (about Rs38 crore), Cipla (nearly Rs19 crore), Lupin (approx Rs32 crore) , DRL (nearly Rs14 crore) and Sun Pharma (around Rs25 crore), according to market research firm AIOCD AWACS.

"Thus, among the domestic and MNC players, the latter would be impacted most positively, as they mostly price their products much higher than the competition and then derive their 100% of the sales from domestic markets.

Domestic companies will be insulated to a large extent as the pricing is not the key growth driver. Their products are therefore competitively priced," said Sarabjit Kour Nangra, VP, research, pharma, Angel Broking.

Since the price control was effective for only a quarter, the impact of it will not be severe for pharma companies. Ranjit Kapadia, senior VP, pharma, Centrum Broking, said: "The impact of this move will be marginal for consumers. The new stock that will come to the market will have the old prices that were existent prior to the price control. Due to the price cap, the combined value loss was earlier estimated at Rs 640 crore, which is on an average around Rs160 crore for one quarter."