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Fitch Ratings in its latest report has said that the government guidelines mandating physicians prescribe only generic drug names face execution challenges and are unlikely to impact profitability of pharmaceutical companies in Indian market. It also said the domestic pharmaceutical market is mainly a branded generics market in which pharma companies sell off-patented drugs under their own brand names with varying prices.

According to the report, a sizeable erosion in branded generics sales share could affect Indian pharma companies’ profitability, as sharply lower average prices will outweigh potential benefits from lower marketing costs. It said ‘even so, we think the new guidelines are unlikely to trigger an immediate shift away from branded generics. We believe the implementation faces practical challenges as India’s less stringent drug quality norms may lead to variability in drug quality and efficacy among various manufacturers’.

Besides, the report said the mandate may shift the decision-making process about the choice of drug manufacturer from physicians to pharmacists who may not be adequately qualified or lack alignment with the interests of patient safety and drug efficacy. It said the latest guidelines are part of the government’s efforts to improve healthcare affordability by promoting the use of unbranded generic medicines that cost up to 80-90 per cent less than the branded versions in some cases. It added that the efforts, which include setting up a nationwide chain of generic-focused pharmacy stores, have supported an uptick in sales share of trade generics or the drugs sold without physicians’ involvement.