Drugmakers to gain or lose the most from revisions in the essential medicines list

Recent changes to the National List of Essential Drugs — a list of drugs whose prices are regulated by the government to ensure affordability — are likely to impact certain drugmakers. According to Anand Rathi, the impact will be visible in the financial earnings for the quarter ending September 2022.

The latest National List of Essential Medicines (NLEM) will likely have a mixed impact on drugmakers, as the government brings 34 new drugs — including anti-cancer drugs, antibiotics and vaccines — under its purview and deletes 26.

The NLEM 2022 has a total of 384 drugs spread across 27 categories. The government regulates the prices of the drugs mentioned in the list keeping in mind aspects such as cost, safety, and efficacy.
According to brokerage Anand Rathi, drugmakers like Sanofi, GSK, Macleods, and Mankind will take the biggest hit due to the addition of medicines in the NLEM 2022.

Sanofi’s Lantus, GSK’s T Bact and Ceftum, Macleods’ Meromac, and Mankind’s Cefakind are the top five brands added to the list, together accounting for sales worth Rs 1,378.9 crore, according to the brokerage.
Sanofi’s Lantus costs 8-11 percent more than the average price, and GSK’s T Bact is 11-13 percent above the average price, the brokerage said in a research report.

On the other hand, removal of the drug ranitidine among the 26 drugs will likely be a relief for JB Chemicals, whose brand Rantac has been impacted by erratic raw material prices.

Around 30-33 percent of the company’s portfolio is under the essentials list, which should come down to 20-22, in line with peers, after the latest changes, according to Anand Rathi.

Here are the 10 companies with maximum exposure to the NLEM, according to the brokerage:

JB Chemicals
Cadila
Dr Reddy’s
GSK Pharma
AstraZeneca
Glenmark

The full impact of the hikes in prices of the drugs will be visible in the financial earnings for the quarter ending September 2022, the brokerage said.

Formulated in 1996, the NLEM was revised in 2003, 2011, and 2015.