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Shares of Hospital stocks, Apollo Hospitals Ltd., Park Medi World Ltd., Aster DM Quality Care Ltd., Max Healthcare Ltd., Fortis Healthcare Ltd. and others sold off again on Monday, October 12 after the conclusion of the hearing on drug price caps in the Supreme Court.
Shares of Apollo Hospitals fell as much as 3%, as did shares of Max Healthcare. Shares of Fortis Healthcare and Aster DM Quality Care also fell 3.3% and 2.8% respectively. Park Medi World, the second largest private hospital chain in North India, also fell as much as 6% on Monday.
During the hearing on Monday, the government told the Supreme Court that there has to be a balance between pricing and availability and that the government is not looking to control the entire market of drugs as the country already has the lowest prices in the market globally.
In response to this, the Supreme Court asked the government as to why can they not control the entire market of drugs and that they are only looking to strengthen the hands of the government.
The apex court also said that manufacturers fix a price accounting for the Research & Development (R&D) spends but they end up being sold at 10x the MRP.
The government said that they are not averse to some of the suggestions coming from the Supreme Court. The next hearing will now take place on Tuesday, October 27.
Earlier, the Supreme Court had called the steep mark up on cancer medicines at the hospitals a "carnage" and suggested a uniform 16% margin on all medicines.
Later, the government announced a 30% cap on trade margins for all non-scheduled anti-cancer drugs. The non-scheduled drugs are outside the regular price control list and do not carry the 16% margin cap.
In 2019, NPPA had capped trade margins at 30% on 42 non-scheduled anti-cancer drugs. The government says that exercise resulted in significant price reductions and around ₹984 crore in annual savings.
Shares of Fortis Healthcare have extended their losses and are now down 3.5%, while those of Apollo, Max, and Aster DM continue to trade with losses between 2% to 3% respectively.
(With Inputs From Ekta Batra)
