Nifty, Sensex to move sideways - Weekly closing report
The market lacks momentum. Nifty can decline if it closes below 7,750
We had mentioned in previous week’s closing report that NSE’s CNX Nifty, and S&P BSE Sensex are within days of a sharp short-term rally and that the 50-stock Nifty will bounce back, around the middle of the week. Both, Nifty and Sensex started moving up from Tuesday noon. Nifty rose from around 7,560 on Tuesday morning to 7,868 on Friday morning. The weekly trend in the markets is given in the table below.
On Monday, negative cues from Asian markets, expectations of a US rate hike, weakening monsoon and a falling rupee eroded investor confidence further. The major indices in the Indian stock market lost 1%-2%.
The US Fed was expected to announce its decision to hike interest rates after a decade or so of easy monetary regime with interest rates pegged at near zero levels during its policy meet scheduled on September 16-17. High interest rates in the US were expected to lead away the foreign portfolio investors (FPIs) from emerging markets like India. It was also expected to dent business margins as access to capital from the US will become expensive.
Monday's stock market decline marked a landmark of sorts for the Narendra Modi government. The markets had come back to levels they had last seen when Modi went on to take over the reins of State. “Is the Modi exuberance over” was the question in the stock markets in India.
On Tuesday, there was a pullback rally and major indices in the Indian stock markets rose by more than 1.70%. A strengthening rupee, efforts to restart reforms and expectation of more rain, coupled with positive Asian market cues, propelled the market higher.
Prime Minister Narendra Modi on Tuesday met union ministers, corporate heads and economists to discuss global markets' turmoil sparked off by the Chinese economic slowdown and attendant opportunities for India.
Analysts pointed out that government's consultative efforts to understand the problems of India Inc at the time of global markets turmoil and positive Asian market cues boosted the Indian equity markets.
A global rally sponsored by reforms and stimulus measures by the Chinese government supported the Indian equity markets on Wednesday, and the major domestic indices advanced by 1%-2%.
The positive signs from the government on the reforms front especially on the passage of the goods and services tax (GST) bill, Prime Minister Narendra Modi's meeting on Tuesday with industry representatives, upcoming seventh pay commission and a strengthening rupee supported the upward movement of the markets on Wednesday.
On Thursday, negative cues from US and Asian market coupled with anxiety over the upcoming domestic factory output data caused the major indices in the Indian stock market to fall marginally. The market was moving sideways after a two-day rally. Expectations that the Bank of England (BoE) will continue with its "easy monetary policy" by maintaining lower interest rates and the gains made by the rupee buoyed markets and the market rebounded sharply from the day’s lows. Still, Indian equities ended in the red at the close of trading.
On Friday, analysts pointed out that the markets were trading in line with its Asian peers and that investors remained wary of taking positions ahead of the key industrial output data. IIP data will have a major bearing on the decision of the Reserve Bank of India (RBI) on the next phase of rate cuts during its upcoming monetary policy meet on 29th September. Over the whole week, the major indices in the stock market made small gains.
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:


Medicine Prices- Part3: Have Indians been taken for a ride?
India could definitely relook into medicine pricing issues and save thousands of crores while bringing more drugs under NPPA
Germany has led the way by coming up with an effective, citizen-friendly and rational drug pricing regime - first in drafting a unique policy and then in standing up to the pressures from vested interests. Interestingly, countries that find German model worthy of emulation but are unable to afford it, have still taken conscientious, rational and citizen-friendly approach of benchmarking to German drug prices to benefit from German diligence. In case the German principles of pricing are applied in the Indian context, would it save our system hundreds of crores of rupees?

Diabetes in India

Diabetes is growing alarmingly in India, home to more than 6.5 crore people suffering with the disease and expected to touch 10 crore by 2013. India is often referred to as “Diabetes Capital of the world” and offers one of the largest population pool of diabetes patients worldwide. Any pharmaceutical company with a portfolio of drugs to treat diabetes sees this as a big opportunity.
Novartis launched Galvus (Vildagliptin) and Galvus Met (Vildagliptin +Metformin) in 2008 while the drug was being launched in Europe around the same time. In order to increase its share, Novartis also licensed the products to other Indian pharma companies (USV, Abbott and Emcure) to market the drug with their own brand name. The sales of Vildagliptin and Vildagliptin+Metformin have been a resounding success for these companies with 2014 annual sales being Rs466 crore (ex-factory price, Source: IMS) for both these products across companies (Novartis Rs250 crore, USV Rs166 crore, Abbott Rs36 crore and Emcure Rs18 crore). Vildagliptin and Vildagliptin+Metformin have been one of the resounding success stories in the Indian pharma market over last couple of years with projected sales of molecule at over Rs550 crore (ex-factory prices) in 2015. 
While the sales have brought tremendous gains for Novartis (selling the product in its own brand name and also earning license fee from partners), it is imperative that we look at the sale values in light of assessment done in Germany by Gemeinsamer Bundesausschuss (Federal Joint Committee or G-BA), and Institute for Quality & Efficiency in Healthcare (IQWiG) for Vildagliptin. You would recollect that Vildagliptin and Vildagliptin+Metfomin were not found to have any added benefit over their comparators and hence the price of Vildagliptin would have had to be revised downwards in reference to the price of comparators. This had forced Novartis, reluctant to reduce price, to withdraw the product in Germany.
Since the scientific rationale of clinical benefits remains the same, it is worthwhile to assess the impact in India based on “no added benefit” of Vildagliptin. The analysis is interesting as comparator drugs are under NLEM and generics are available in India.
Vildagliptin 50mg, Metformin 500mg, Glibenclamide 5mg and Insulin 40 IU/ml – dosage taken as two times/day
Metformin, Glibenclamide and Insulin are under NELM list in India and ceiling prices for these medicines taken from NPPA order of February 2015. Metformin 500mg Rs1.72/tablet, Glibenclamide 5mg at Rs1.06/tablet, Insulin 40IU/ml Rs14.14
Vildagliptin 50mg unit price Rs23.4/tablet taken based on selling price of Rs656 for pack of 28 tablets and Vildagliptin 50 + Metformin 500 unit price taken at Rs23.5/tablet, based on selling price of Rs 1410 for pack of 60 in the market
One is simply left stunned and shocked looking at the massive price difference. In essence, we can get the same health benefit by paying 15% of the price we are paying for innovator drug.
This is a classic case of a multinational company introducing a new drug (so-called innovator drugs), wherein incremental benefit is not proven, over a generic drug and still commands a premium price.
The annual market of Vildagliptin in 2015 is expected to be Rs564 crore (ex-factory prices). Taking the cost of comparator treatments (over which Vildagliptin has no added benefit) at 15%, the cost would be Rs85 crore, that means saving of Rs479 crore per year.
Taking into account the life of the drug to be another 10 years that means a saving of Rs4,790 crore at least from our healthcare system. In a country, like India, where patients pay out of their pockets for pharmaceutical, insurance and healthcare needs, funds deserve better utilization, so that we direct resources where needed- to provide basic healthcare to 120 crore Indians. If a developed country, like Germany, can adopt a rigorous health benefit assessment procedure and not give into ways of innovator companies to have their say on pricing – it’s high time the Indian price regulator takes note of this, which continues to erode thousands of crores from our healthcare system or individual pockets. The stereotyped response from drug manufacturers justifying high drug prices funding public interest through higher investments in innovation too is turned on its head in the example as innovation (drug efficacy and safety) itself is suspect.
In 2013, there were accusations that sales executives were padding invoices and then using incentive payments to buy the diabetes drug Galvus from wholesalers, so that they could hit their sales targets. Also, there were allegations that wholesalers were extended credit for up to a year as an inducement to load up on supplies of the drug. In fact, the Pharma Wholesalers Association (PWA) of Mumbai region had even asked Novartis to check certain practices such as massive discounts and freebies to distributors to sell stocks of Galvus. The PWA letter to Novartis stated “We solicit this requirement to comprehend and discourage any type of unhealthy distribution practice prevailing in pharmaceutical supply chain”. In an interview with a leading business daily, the stockists had mentioned that Novartis sales representatives were offering 20% discount to select dealers for the purchase of Galvus.
Novartis may have pushed its sales representatives hard to sell a drug that lacks the scientific evidence of superiority over existing treatments to boost sales. It is time that National Pharmaceutical Pricing Authority (NPPA) take immediate cognizance of this case and include Vildagliptin under price control by revoking Paragraph 19 of DPCO. 
Last year, when the government tried to bring several drugs under NLEM to exercise price control in public interest, there was fierce opposition from pharma lobby and eventually the government had to give in. However, there is no reason for the Indian government to abandon patients to reel under financial burden, in cases like this, where clinical evidence provided by Novartis to the German authorities was not able to prove that there is any added benefit of vildagliptin over existing drugs which are available in India at 85%+ discount. 

Bring all medicines sold in India under price control: Parliamentary Panel

A Parliamentary panel has recommended expanding the scope of price control to cover all medicines available in the country. According to a report from the Standing Committee, which was tabled in Parliament earlier this year - all medicines including lifesaving drugs, should be available in the market at affordable cost. The Committee was of the view that all medicines are essential and are only taken when it is needed by the patient.
We believe that the time has come for the government to move in this direction and to implement the recommendations of the Standing Committee. To decide on the incremental benefit of new drugs, the NPPA could collaborate with German G-BA (self-governance body which makes reimbursement decisions), as they have conducted pricing analysis for most of the new drugs launched in the last couple of years. 
Many in the developing world (led by global NGOs aiming to maximize impact of aid) look to India for affordable drugs and healthcare. Our drug policies provide a ray of hope to millions of patients, including many in the developed world, where half the population cannot afford medicines at local prices. They cannot travel to India or buy from Indian drug companies. India could definitely relook issues raised and save thousands of crores while bringing more drugs under
NPPA and also evolve innovative regulatory mechanisms, by learning from the best global practices in maximising the benefits from the buck spent on public health. 
Moneylife sent an email to Novartis on the pricing issue of Galvus (Vildagliptin) on 8 September 2015, which remained unanswered till writing this report. We will include, Novartis comment or views, as and when we receive it.  
You may also want to read…
(Sandeep Khurana is an independent consultant and researcher. Views expressed here are personal. He can be reached at his twitter Id @IQnEQ



Ajaykumar Sharma

2 years ago

Nice Article. Have presented facts quite nicely. Also stirs up the environment for discussion.
But i believe we are still looking at stop gap measurements to address a issue which runs deep in our economy.
Would like to add a few thoughts from my end which may help in furthering the discussion

1. AMNOG is a system for Developed country like Germany which has a high expenditure on HC being done by the government. It is definitely not a great comparator to India which has a dismal HC spend of only 1% GDP and a very poor spend of only 5000 Crores on purchase of Medicines only. Imagine the Excise duty collections on Liquor alone of Kerala state was more than 8000 crores.

2. AMNOG takes comparator which are not true substitutes to the drug in question. IN your case above - "Two-thirds of DAK-insured patients who took Vildagliptin until market withdrawal, were directly shifted to other therapies by their doctor within the following quarter. Almost 12% were moved to the therapies determined as comparable by the German federal joint committee (G-BA). 44% received the similar product Gliptine and a small percentage were moved to a new drug class." -

3. No where does the recommendations say that bring all medicines under Price Control - "The Committee were surprised to know that all the
medicines are not listed in National List of Essential Medicines.The
Committee were of the view that all medicines, including Life
Saving Drugs should be available in the market at affordable cost. The
Committee, therefore, recommended that the scope of price control needs
to be enlarged to make all the drugs available especially Life Saving Drugs
in all parts of the country and the Government should also expedite the
process of notifying the ceiling prices of the remaining medicines" -

Guess neither the Law makers nor the NGO's nor the people of the country want to control the Pharmaceutical industry. The common objective is to provide affordable medicines to the people who need it.
We have price controls since 1970's. Has that helped in improving the situation. Since Health is a State subject, the government has to take the responsibility of being a SPENDER here because any level of lowering of prices is still UNAFFORDABLE for the Below Poverty Class of patients who still need those medicines.

Truly said by the Author that we definitely have to Innovate if we need to get out of this menace of Availability Vs Affordability discussions moving forward..AND PRICE CONTROL alone may not be the way forward


Sandeep Khurana

In Reply to Ajaykumar Sharma 2 years ago

Thanks for your views. I agree on creation of an environment for larger debate, not just on pricing medicines but overall healthcare which is in focus since few days due to dengue deaths.
On your specific points:-
1. You are right that Germany and India are different contexts. But that makes it even more incumbent upon India to be wiser in its spend. If developed world with supposedly better resources is making every penny count, we cannot afford drain of precious national funds and must save where we can. Argument could well be that India has only 1% of GDP for Health, and so should be wiser. It is nobody's case that health spend should be 5% of GDP before we get prudent in expenses.

2. No two molecules are alike. Comparator is nearest substitute and not exact substitute- both the industry and regulator has experts who can assess fairness of comparison before comparing. If indeed Novartis had case under AMNOG that comparator is unfairly selected, they could have easily proven it to German Federal Joint Committee. Despite severe loss in a market they wanted to be in, they withdrew without contest. Your inference from that is as good as mine.

3. You rightly quote the Parliamentary Committee ""The Committee were surprised to know that all the
medicines are not listed in National List of Essential Medicines." And this with the follow-up comments are self-explanatory on scope of drugs to be under price control under NPPA(DPCO).

4. Price control of NLEM has indeed helped patients. In fact, poor patients from developed countries like Australia too rush to India for life-saving drugs and price control has saved millions of lives while still having a flourishing pharma industry here, that must get credit where due.

Just to be sure, when I say we must innovate, we mean real innovation, that must be scientifically proven by better outcomes. Else, innovation as a default claim by any new molecule, is instead to be challenged just as Germany did and saved themselves a packet. True innovation with fair pricing and controls on life-saver drugs, must both be done without either step being substitute of other towards better health.

Amit Dang

2 years ago

Hello Mr. Sandeep,

Will it be possible for you to get in touch with me on [email protected]?

I have closely followed all 3 articles of yours and would like you to go through my company's website

The germany example is something that we provide as a service (proving clinical and cost effectiveness), but so far have not worked with Indian pharma as such. Reason? Generic market and the model more or less applies for innovator brands. But,it still makes sense at Govt. level, so that we bring only those molecules in the market which is better then the existing ones and not just "me-too" drugs.

Would be glad to take this discussion on e-mail.Tried searching your e-mail but could not find.

Dr. Amit Dang, M.D.
Founder and CEO, MarksMan Healthcare Solutions, HEOR and RWE Consulting, India

Gold monetisation and sovereign gold bonds schemes have advantages
Gold and jewellery form part of ‘secret reserves’ of institutions and individuals. Until the government is able to establish its own credibility as a guardian of trust, there will be bickering
In my article “How about Re-visiting the idea of Gold Bank?” posted here on February 16, 2015, I had stated that “A change in approach to gold management can rewrite the India Growth Story to the country’s advantage” and listed the advantages of gold deposit accounts with banks asunder:
1) When some banks start opening gold accounts, they will also be able to maintain more liquid assets under Section 24 of the Banking Regulation Act, 1949(the section requires banks to maintain a certain percentage of their liabilities in cash, gold or unencumbered approved securities) in gold.
2) Individuals and institutions will be encouraged to keep their gold stock with banks thereby reducing misuse(Now for the rich, gold is a medium to show off their wealth- Not only in the form of jewellery, but by erecting statues and flag masts in solid gold-less said about the malpractices practiced in such transactions, the better!)
3) Need to import gold will get considerably be reduced resulting in saving precious foreign exchange.
After considering suggestions from many quarters like this and taking a view on the basis of studies by RBI and government, Budget 2015-16 included proposals to introduce a couple of schemes for exploiting the domestic gold stock to the country’s advantage.
The Union Cabinet on September 9, 2015 gave its nod for Gold Monetisation Scheme which envisages deposit of gold with banks by public and Sovereign Gold Bond Scheme which will make it possible to deposit cash in bonds which will have a growth path tracking gold prices. Both deposits will carry interest and will be for fixed tenures, extendable in certain situations. Let us await more details, which will be available as and when banks announce their schemes. This is a welcome beginning.
The response to the schemes from the media is mixed. From fear of taxmen dampening the willingness of investing public to hearty welcome to schemes that meet the twin-objectives of earning income from a ‘dead’ investment and allowing public to invest in ‘paper gold’ without the bother of having to ensure the quality of gold which one owns.
Trust and credibility issues
However, implementation of these schemes or taking forward any initiative to manage domestic stock of gold is not going to be very smooth. Mainly, there are several credibility and trust issues which are tricky. Gold and jewellery formed part of ‘secret reserves’ of institutions and individuals. Until the government is able to establish its own credibility as a guardian of trust, there will be bickering.
Though steps so far are in the right direction and may fetch some positive results, much more need to be done, if at least a substantial portion of the surface domestic stock of gold (latest estimate @22,000 tonnes) is to get into the mainstream. First and foremost would be restoring credibility in the institutional system (includes government) that will handle the yellow metal, if the present holders are willing to ‘sacrifice’ by temporarily parting with their prestigious possessions for the country’s economic growth. Two, there should be clear disincentives for hoarding gold stock, in whatever form and more particularly against misuse of the precious metal for showing off (this include building gold statues, gold-plating etc.). Government should also consider recovering at least a part of costs incurred for providing security for the huge stocks of gold and jewellery maintained by individuals/institutions.
But there are many ifs and buts in the process. The vested interests have their spokespersons everywhere. Without linking to these observations, let me quote a couple of sentences from the editorials that appeared today in two mainstream newspapers commenting on the two gold deposit schemes announced:
“…An amnesty made the gold bond scheme way back in 1998 attractive to investors, but amnesty is not an option today, after a government commitment to Supreme Court against future amnesties in 1997.”
“…If the government really wants the scheme to succeed, it may want to persuade income tax authorities to lay-off from closely scrutinising gold deposits. It must clearly prioritise what objective it wishes to pursue.”
Such warnings will naturally put any government in dilemma of sorts. But, how long law enforcement or legislative reforms, where necessary, can remain at the bottom of the priority list of any government?  But, we hear such views from not only media, but from eminent economists also, when it comes to accumulated assets or assets flow from outside (including gold smuggling).
Without elaborating, let us pray to government to be transparent in its priorities, as institutional and government credibility will decide the success or failure of schemes like this.



MG Warrier

2 years ago

My online comment with reference to an article captioned “Can anything beat the allure of gold?” by Madan Sabnavis published in The Hindu Business Line on September 11, 2015 and an interesting interaction with a reader reproduced below:
September 12, 2015
Comment by Radhesh:
It is a challenge to make the LADY OF THE HOUSE to part with gold no matter in any form or how attractive a gold deposit scheme. Trusts, temples and HNI's can find this scheme attractive.

My online response:
At least, let people start talking about gold and jewellery. Gold stock, like any other national resource need to be assessed and accounted. Once gold is restored its position as a commodity and the lure and secrecy part are detached, our domestic stock of gold will play its natural role in India Growth Story. We are stretching too farthe fear of 'THE LADY OF THE HOUSE'(taken from one of the comments) and the right of individuals and institutions to be secretive about gold. M G Warrier, Mumbai

Radhesh replies:
Radhesh wrote: "@M Govinda , Women give their jewellery when their is a financial emergency in their home, hoping that they will get it back. Asking THE LADY OF THE HOUSE to give her jewellery for this scheme is a bit too ambitious. As gold needs to be given in the form of coins and bricks. In case you come across any LADY who has willingly parted her jewellery for this scheme do let all us know. Based on facts I shall definitely change my opinion.".

My reply:

Hope this response will be published for the benefit of Radhesh! The schemes are yet to be formulated and launched. What we know is, the broad contours have been approved by Union Cabinet. Send a mail to [email protected] now and I will remember to update Radhesh about the progress of the scheme one year after launch. Things do not change in a day. Even Rome was built over a period of time. And, even Greece can have problems! M G Warrier, Mumbai

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