Yesterday there was a report in Fierce Pharma regarding India placing price caps on a large number (>100) of big selling diabetes and heart drugs. These caps have hurt Sanofi's local sub already as it is a big player in these therapeutic areas. Their stock has already dropped 10% on the Bombay Exchange. But worse yet, Sanofi -- according to analysts -- could see revenue drops up to 9.5% and drops in profits by as much as 30%.
According to Fierce, India expanded price controls from 74 to 652 drugs last summer and their sales fell by almost 8% as a result (though volumes may be up). When Pharma tried to make up the price difference by cutting the margins it offered to its distribution network, they rebeled by cutting orders.
This is yet another indication that the rules will change for pharma in many emerging economies. These same markets are perhaps NOT the saving grace they were envisioned to be when Big Pharma eyed them as fertile marketing zones with a burgeoning middle class ready to be treated.
Posted by Bruce Lehr July 17th 2014.