CARMA Analysis

Drug Pricing in India

(May 2012)
For the month of May 2012, drug pricing in India was much discussed in the earned media. At close of April, Government allowed
Indian firm Natco Pharma to sell generic version of cancer drug Nexavar at far lower price than that offered by patent-holder Bayer
Corp. Further fueling the discussion about drug pricing, drug maker Cipla announced slashing prices of certain cancer drugs. In the
later half of the month, Group of Ministers (GoM) led by national agriculture minister Sharad Pawar reportedly took up dialogue
about controlled pharma pricing with respective parties.

CARMA International, the world's leading independent media measurement and analysis company used its proprietary media
content analysis methodology to analyze Indian media coverage* for the 1-31 May 2012 period. A count of 65 news articles
underwent extensive human-based research by trained content analysts. The CARMA analysis developed insights about drug
pricing debate, commentators who influenced the debate and messages that reflected varied perceptions.

*CARMA handpicked a sample of 12 media outlets notable for their editorial contribution and Pan-India exposure. These include Business dailies:
Economic Times, Financial Express, Business Standard, Mint; Mainline dailies: Times of India, Hindustan Times, Telegraph, Hindu, DNA; Magazines: Business World,
Business Today, India Today

Note Bene : The present study findings are indicative and not inclusive of all possible media analysis indices that CARMA International offers as part of its
bespoke and comprehensive media evaluation suite.
Leading Triggers for debate in news media
CARMA analysis identified broadly who initiated discussions in news media about drug pricing with an aim to better understand who is
driving the agenda on this critical issue
Notably, the issue of drug pricing was near
equally originated by Government as the
Pharma companies. Ciplas announcement
to slash cancer drug prices was the large
corpus of company initiated news coverage.
Of the Government driven news reporting,
GoMs interactions with diverse stakeholders
of the India pharma industry provided the
impetus for coverage. Of the third party, it
were the NGOs and political activists as MP
Jyoti Mirdha who took up the issue of drug
pricing.
Looking in detail, following were the notable elements of the company driven news reporting .

In the early half of the month, generic drugmaker Cipla announced slash in prices of certain cancer drugs by an overwhelming
76%. Media was quick to corroborate the move comes on the back of the government allowing domestic firm Natco Pharma
to sell generic version of cancer drug Nexavar at nearly 97% lower price than charged by patent-holder Bayer Corporation (4
May, Times of India).

The news reporting thereon involved several segments. YK Hamied, CMD, Cipla espoused : "This initiative of price reduction is
a humanitarian approach by Cipla to support cancer patients (Financial Express, 4 May). Bayer spokesperson strongly hinted:
"We will rigorously continue to defend our intellectual property rights which are a prerequisite for bringing innovative
medicines to patients (Financial Express, 8 May).

Other than the company officials, Anjan Sen, director-healthcare, Deloitte Touche Tohmatsu India noted : "It's a smart move by
Cipla. With this, they will reach many more patients, and will also be able to garner greater market share (Economic Times, 5
May). Some unnamed industry experts anticipated: Cipla's move will trigger a reevaluation of portfolio and prices in the
oncology segment for all companies competing in this space (Economic Times, 6 May). Rival companies even though not
named, reportedly saw the move as a desperate effort by Cipla to prevent its products from losing out in the market place
owing to competition (Financial Express, 5 May).
Company
43%
Regulatory /
Government
41%
Third Party
16%
Leading Commentators
Commentators - SoV
The news articles about drug pricing engaged a host of commentators. Officials from pharma companies were active
commentators on the issue of drug pricing (29% SoV). Industry associations trailed close with a 22% SoV with all others
garnering less than 20% SoV.
Note Bene : For the present study, Pharma Company Official includes both prescription & generic drug makers.

Commentators Favorability Analysis
On in-depth favorability analysis of each Commentator, clearly NGOs and Other political sources (political person but not
holding a post in the government) were negatively biased and sought cost based drug pricing. Analysts, Regulator and Other
sources largely tended to hold a neutral view. Notably, Pharma company officials, Government and Industry associations
represented mixed views on drug pricing.

Below sections report the points of view reported in relation to various category of commentators

Pharma Company Officials: As the study featured officials of generic and prescription drug makers under a single umbrella of
Pharma companies, therefore divergent views emerged. YK Hamied, CMD, Cipla the leading source for the period of study
was oft quoted in relation to price cuts for Ciplas cancer drugs. While most often neutral to drug pricing issue he sometimes
propagated compulsory licensing policy: Now that Cipla has also reduced prices, the government should wake up and
announce a pragmatic compulsory licensing policy" (Financial Express, 5 May). Contesting this, Ranjit Shahani, president of
OPPI and head of Novartis India operations said: "Around 35% of our population that lives below the poverty line will not be
able to afford medicines at any price because of the huge socio-economic disparities. Any efforts at price control will,
therefore, be unsuccessful at reaching the loftier goal of healthcare for all" (Financial Express, 14 May).
Government: Over the proceedings of the GoM, several ministers were quoted with some taking positions in relation drug
pricing. For instance, During the last GoM meet, health minister Ghulam Nabi Azad argued the prices of drugs should be based
on the cost of production (Business Standard, 14 May). Commerce and industry minister Anand Sharma took a more balanced
view: "While market-based pricing is certainly a more judicious methodology than the cost-based price control as it prevails,
perhaps a weighted average of all brands of formulations with more than 5% market share may be considered to avoid
cartelization" (Financial Express, 25 May).
Industry Associations : DG Shah, secretary general, IPA emphatically supported : The time has come to move away from cost-
based pricing since you cannot have the same norms for those who make drugs from a garage and those who do it out of US
FDA-audited facilities, (Financial Express, 25 May).
Other Political & NGO : Congress Nagaur MP Jyoti Mirdha was most vocal political figure along with NGOs, Jan Swasthya
Abhiyan (JSA) and All India Drug Action Network (AIDAN) in demanding that all medicines marketed in India be put under price
control. Mirdha contended: "There appears to be no effective way to keep (drug) prices and profits at reasonable levels except
by bringing all drugs under price regulation (Telegraph, 18 May).
Analysts: Most analyst comments were about impact of price cuts on Ciplas business. Sarabjit Kaur Nangra, vice-president,
research, at Angel Broking however took an unfavorable view about drug pricing:There are more and more cancer cases now.
And in India, there can be no case for premium pricing (Financial Express, 5 May)
Commentators FNU Analysis Commentators - Share of voice
CARMA analysis determined the sources influencing the discussion about drug pricing and also put forward opinions resonating in
news media
30%
22%
17%
11%
9% 9%
2%
0%
10%
20%
30%
40%
%

S
h
a
r
e

1
9
%

2
5
%

1
3
%

6
8
%

6
7
%

5
0
%

8
0
%

1
0
0
%

1
3
%

8
%

3
7
%

1
0
0
%

2
0
%

1
0
0
%

0%
20%
40%
60%
80%
100%
%

S
h
a
r
e

%Unf %Neu % Fav
Key Messages
The decibel for cost based pricing was significant as Drug price controls enhance access to medicine / make healthcare
affordable and Cost of production should be basis for drug pricing were the leading two messages for the month. However the
following three consecutive messages espoused market based pricing, thus creating as much awareness of the pharma
companies point of view. The messages thereafter represent corollary discussions. Overall, the ratio of unfavorable : favorable
messages was tipped at 38:26 respectively.

Below are key quotes that encapsulate the messages identified by CARMA Analysts

Drug price controls enhance access to medicine or make healthcare affordable / Cost of production should be basis for drug
pricing
MP Jyoti Mirdha told a ministerial panel set up to finalise the country's drug pricing mechanism that retail prices of medicines
should be fixed on the basis of cost of production (Times of India, 20 May).
On Market based pricing, Amit Sengupta of JSA said : "Allowing such price mechanism would mean legitimizing the high prices
of drugs and this doesn't augur well in a market where 80% of healthcare costs are incurred out of pocket and of this, over 70% is
spent on medicines (Financial Express, 18 May).
YK Hamied, CMD, Cipla sought to encourage affordability by drug price controls : "My move is not against multinationals, and
has nothing to do with Natco. It is all about making drugs affordable" (Financial Express, 5 May).

Market based drug pricing should prevail / Drug price controls stifle competition or innovation or investment in the drug
industry / Prescription drugs are more effective than generic drugs, or ,are of better quality
The patent office's move had stirred up a heated debate on the pricing of medicines in the country, with multinational
companies arguing that such a move to stifle prices will undermine innovations in the industry (Financial Express, 5 May).
Ranjit Shahani, president of OPPI and head of Novartis' India operations said: "Around 35% of our population that lives below
the poverty line will not be able to afford medicines at any price because of the huge socio-economic disparities. Any efforts at
price control will, therefore, be unsuccessful at reaching the loftier goal of healthcare for all" (Financial Express, 14 May).
A section of the industry feels that price is not the only determinant in the oncology market, and quality becomes more
important especially in critical care productsZohra Dawoodani, senior project director, Ipsos Research noted: "Hence the
decision of a doctor to choose a premium priced brand over an economical one will depend on the patient type, stage of disease
and affordability (Economic Times, 6 May).




CARMA analysis determined the messages being put forward in news media in an effort to determine the perceptions being created in
relation to issue of drug pricing
1
1
2
2
2
2
2
3
4
4
5
11
12
13
0 2 4 6 8 10 12 14
Drug price controls deter bringing in of patented drugs/investments
Prescription drugs are more effective than generic drugs / better quality
Regulation in drug prices is harmful for industry / patients
Regulation in drug prices is legitimate / prevalent in other countries too
Industry spends far too much money on marketing efforts
Cost based pricing of medicines is a relevant mechanism
Generic drugs are as effective as prescription drugs / offer same quality
Cost based pricing of medicines is no longer a relevant mechanism
Drug price controls stifle competition / innovation/ investment
Market based drug pricing should prevail
Cost of production should be basis for drug pricing
Volume
Neg. Msg. Pos. Msg
Drug price controls enhance access to medicine / make healthcare affordable
R&D by industry brings unique drugs for untreated/ life threatening
Manufacturers only care about making a profit / put profit ahead of patients
For customized CARMA analysis services in relation to your company & brands, article tonality, spokesperson effectiveness, key messaging
and other such media impact parameters, please contact

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