Price fixation of essential drugs hits profitability: Novartis

New Delhi: The fixation of ceiling prices of essential drugs by the pharma pricing regulator NPPA has impacted the profitability of the company, drug firm Novartis India has said.

The government's push for prescribing the drugs by generic names could pose further challenges, Novartis India said in the latest annual report for 2016-17.

"The efforts of the National Pharmaceutical Pricing Authority (NPPA) to fix the ceiling prices of medicines through NLEM-2015 continues to severely impact the company's profitability", Novartis India Vice Chairman and MD Ranjit Shahani said in his address to the company's shareholders.

Consequently, despite the many productivity measures taken by the company during the year, the profit before tax margin was low at 12.6 per cent of total income, he added.

"The mandate to prescribe medicines by generic names may negatively impact the company further", Shahani said.

Regarding the Goods and Services Tax (GST) he felt its success will largely depend on the execution.

"Success of the roll out of GST in Q2 of the current financial year and its impact on industry in general will depend on its smooth implementation", Shahani said.