Pharmaceutical Sector Market Study| CCI begins Consultation Process with Stakeholders

In October 2020, the Competition Commission of India (‘CCI’) launched a market study to assess the competitive landscape in the pharmaceutical sector. The CCI indicated that the objective of the study is to assess antitrust concerns in the drug supply chain. The market study would help the CCI assess the business practices prevailing in this sector, instead of discovering conduct by way of a formal investigation at a later stage. In the words of the CCI Chairperson, Mr. Ashok Gupta, the aim is to “come out with an advisory for all the participants in the drug supply chain – from pharma companies to retailers – that may take the form certain dos and don’ts”. In the past, the pharmaceuticals sector has been one of the CCI’s topmost enforcement priorities.

CCI’s approach towards this study is similar to what it has carried out previously in relation to the e-commerce and telecom sector, i.e., to engage in an efficient and productive consultative process with the relevant stakeholders. To this extent, the CCI recently issued a public notice dated February 19, 2021, which welcomed participation from relevant stakeholders in the pharmaceutical industry, especially, pharmaceutical companies, stockists, chemists, sector experts, trade associations, doctors, and regulators. The CCI is likely to publish the key findings and observations arising out of the study in a report, as has been its practice.

The CCI has indicated that the study would primarily focus on the distribution segment of the pharmaceutical market, with a view to understanding:

i.      discounts and margin policies at the wholesale and retail levels of the distribution system;
ii.    the role of trade associations vis-à-vis various aspects of the distribution business;
iii.   regulatory rationalization of trade margins and its impact on price and competition; and
iv.    the impact of e-commerce on price and competition.

The study also aims to investigate the extent of proliferation of branded generic drugs in India along with its implications for competition, and to assess potential hurdles relating to the entry of bio-similar drugs in India.

The consultation process will also provide the relevant stakeholders the opportunity to engage in a productive dialogue with the regulator and share their views on the rationale for business practices, key concerns in the sector, and the means for ensuring competitiveness in this industry.

Any of the abovementioned stakeholders willing to participate in this process may reach out to the CCI at till March 19, 2021.

Published In:Inter Alia Special Edititon - Competition Law - March 2021 [ English
Date: March 15, 2021