When was the last time you visited the pharmacy store and checked the MRP on medicines? Or, did you ever checked it? Most people ignore the MRP and do not even ask for cheaper alternatives out of fear of getting substandard ones.
Well, the cost has nothing to do with the quality when it comes to medicines.
Let me break down the cost and quality myth to you.
Every India-made medicine has to follow the country’s quality standards. The cost of producing medicine, branded or otherwise, differ by a very negligible margin (that too, sometimes). Unfortunately, in India, there is no government capping in selling and cost price for all medicines (there is a capping based on the molecule/content). There are more than 600 molecules, and combining them into a single dosage will make to 1500+ commonly used ones wherein only 500 such molecules are under Drug (Price Control) Order where the price-cap is applicable.
But then, most manufacturers find a workaround to do away with price capping.
For example,
Molecule A – 5 mg + Molecule B- 100 mg = Capped
Now, making it
A–6mg + B-99mg = Out of Capping zone
It leads to medicine manufacturers taking full control over the selling price and leveraging their brand image to charge more. Again, ‘brand’ means they have incurred expenses in marketing and nurturing a network of medical representatives who gets their fair share out of it.
Recently, 8600 companies have claimed ‘gifts to doctors’ under the tax deduction for marketing expenses – another reason why they have a high price as compared to generic medicines.
Now, I’d want to draw your attention to the manufacturing cost.
For instance, the manufacturing cost of a particular medicine in a branded company will be INR 5.20. On the other hand, a generic pharma company would make the same medicine at INR 4.75. The difference is about 5%-10% depending on the manufacturer.
Considering these medicines to be out of the DPCO capping, big companies like Zydus, Cipla, etc. would beef up the price and sell it for INR 50. On the contrary, the generic manufacturer would sell it for a relatively meagre profit of INR 10.00.
Therefore, medicines are not expensive. They are made in similar kinds of facilities and have an almost similar cost structure. Now, few of you may ask how to ensure that the non-branded medicines have the same quality as that of the branded ones? Well, quality and brand work differently in pharma space as compared to electronic or retail goods. Fortunately, the difference in margins between manufacturing a sub-standard and standard medicine is hardly 5% to 7% that is unlike other industries.
Nowadays, plenty of generic pharma companies are also emphasizing on getting WHO-GMP certification to demonstrate their competitive eminence. It is something that even the branded pharma companies have. So technically, the quality is not compromised and nor is the cost of production compromised to a hefty margin.
This brings us to question – Why are medicines expensive?
Generic medicines do not boast a strong network like well-known companies because of various reasons.
Primary reasons for a lesser selling cost by generic pharmaceuticals are –
– No commissioning to medical representatives
– Not allowing more cut to pharmacists as they are priced lower than branded ones
– No gifting to doctors or hospitals as they could not afford it.
The majority of branded companies are also running a business to produce generic medicines. Over 90% of such branded pharma companies use the same facility and quality standards to manufacture generic medicines. For instance, Cipla’s generic wing is one of the largest manufacturers in that space with a business worth more than 1500 crore rupees. On the contrary, their branded business is worth 6000 crore rupees.
The medical practitioner / Doctors have the MCI guidelines to follow that mentions doctors can only the generic medicines. Unfortunately, they do not follow it. Instead, many doctors incentivize the brand and push only the branded medicines to earn a share from the medical representatives. They earn more from such channels by pushing the fear down on patients’ throat when anyone asks for generic medicines. These doctors are well aware of the patient’s emotions when they are most vulnerable. In worst cases, a doctor would deny taking the patient’s responsibility if one to replace prescribed medicines with the generic ones.
Bottom Line:
Patients and their loved ones often find themselves trapped and helpless when it comes to buying the medicines. They do not check the price, nor do they put any thoughts before buying, and that leads to doctors and pharma companies exploiting them more. A strong sense of awareness with this regard is the need of an hour. We, at Medkart, are available to answer all your queries and even help you understand these things better. Such awareness about the quality and pricing of the medicines can save you more than 200% on medicines, yearly.
