Shockingly high profit margins on Cardiac stents : NPPA Report
In the process of fixing prices for cardiac stents including Drug-Eluting Stents (DES) as well as Bare Metal Stent (BMS), the National Pharmaceutical Pricing Authority (NPPA) recently released data of the profit margins at all the levels in the stent trade.
The stent manufacturing companies had submitted the data to NPPA as per that the NPPA has released the list of profit margins at all level of sale. The data shows that the margin on stents range from 270% to about 1,000%.
The manufacturing cost of a drug eluting stent (DES) for a domestic company is about Rs 8,000 and the price of an imported DES starts at about Rs 5,000. Combining of the data for DES along with bioabsorbable stents makes it difficult to get an exact idea of just how much the mark-up on DES alone could be. DES constitutes over 95% of the stents used in India, reports ET.
According to the profit margin list issued by NPPA, hospital margins appear to be the highest, touching about 650%. The biggest jump in price seems to happen at the level of hospitals, not all hospitals might be charging that high a margin as it ranges from 11% to 654%.
As per the data released by the NPPA, the cost of the imported bare metal stents including all the taxes is between Rs. 4,192 and Rs. 16,749 would finally cost the patient and his family anywhere between Rs. 30,000 and Rs. 50,000. The price differences for domestic bare metal stents also fall in the same range finally weighing in at Rs. 25,000 to Rs. 75,000 for the patient reports Hindu .
The landed cost of such imported devices standing between Rs. 5,126 and Rs. 40,820, the final retail prices, however, come in at Rs. 40,000 to as much as Rs. 1.98 lakh.
NPPA listed the prices of 9 companies, including those of market leaders such as Abbott, Medtronic and Boston Scientific that together account for nearly 60% of the market share of stents in the country . Some of the figures in the report
- In the case of Abbott, the difference between landed cost (LC) and price to distributor (PTD) ranges between 68% to 140% across different brands; that between PTD and MRP ranges between 72% to 400%; and finally between LC and MRP ranges between 294% to 740%. Abbott makes institutional supply to CGHS with a margin of 100% to 200% only. This indicates the quantum of margin in the distribution channel, which is totally detrimental to consumer interest.
- In the case of Medtronics, the margin between LC and PTD ranges between 82% to 232%across different brands; that between PTD and MRP ranges between 170% to 325%; and finally that between LC and MRP ranges between 498% to 854%.
- Similarly, in the case of Boston Scientific, the margin between 43% to 105% across different brands; that between PTD and MRP ranges between 175% to 809%; and finally that between LC and MRP ranges between 464% to 1200%.
Profit Margin of Manufacture, Distributor and Hospital
Maximum and Minimum landed cost(LC), price to distributor( PTD) and MRP, and the margins in respect of Stents across different manufacturers and brands, which is as under:-
|Rs/ Landed Cost||PTD MRP||%PTD||LC %MRP||PTD % MRP||LC|