The government has capped trade margins on 137 non-scheduled oncology drugs through an NPPA order issued over the weekend. According to reports from CNBC TV18, the new norms establish trade margins capped at 30% of the Maximum Retail Price (MRP) with revised prices effective from November 9, 2026. The 137 drugs include branded drugs and high-value molecules like Bevacizumab, representing a significant policy shift for the healthcare sector. However, the Supreme Court has now escalated scrutiny by asking the federal government to probe allegations that hospitals make patients purchase medicines from their own or designated pharmacies, especially when the drugs carry steep margins. As reported by Press Trust of India, the court described a markup of as much as 10 times on cancer drugs as "carnage," asking whether there should be a uniform 16% margin on all medicines. The latest NPPA measure is expected to reduce maximum retail prices (MRPs) of affected medicines by up to 70%, depending on their existing price structures, with the move aiming to curb excessive margins in the distribution chain and make cancer treatment more affordable.
Healthcare sector stocks have experienced significant declines in recent weeks, with Apollo Hospitals shares down 11.5% in the last one month, while Max Healthcare declined 20%, Fortis Healthcare fell 18%, and Healthcare Global dropped 16% during the same period. As reported by CNBC TV18, these declines precede the government's announcement of the new drug pricing regulations, indicating investor concerns about the potential impact on the sector. Bloomberg reports that Nomura estimates average drug prices in India will fall by about 50%, with the near-term impact likely to be more pronounced for companies with high oncology exposure. The latest developments show that shares of hospital chains and pharmaceutical companies with oncology exposure will be in focus on Monday, October 19, as the market responds to the NPPA's announcement.
According to analysts speaking to CNBC TV18, the hospitals industry will face negative business impact as hospital pharmacy margins will be affected by the decision. The sector expects near-term headwinds to Average Revenue Per Operating Bed (ARPOB) and margins for oncology-focused hospitals such as Healthcare Global. Brokerage firm Nuvama anticipates a 4% impact on Max Healthcare and 1% to 2% impact for others, with pressure on their ARPOBs, though hospitals are expected to offset this impact through other price hikes. Upstox reports that the overall impact on these hospital chains will depend on their exposure to the 137 formulations, procurement costs, and the contribution of medicine sales to their oncology business. The 30% cap applies to trade margins and does not automatically translate into equivalent reduction in manufacturers' realisations or profits, with the actual impact on earnings depending on affected products' contribution to businesses. Bloomberg analysis shows that HealthCare Global Enterprises Ltd. derives 72% of its revenue from oncology, while Max Healthcare Institute Ltd. gets about 24% and Apollo Hospitals Enterprise Ltd. and Fortis Healthcare Ltd. about 16%.
Healthcare Global Chairman BS Ajaikumar expressed concerns in an interaction with CNBC TV18 on October 9, stating that pharma companies do not want to manufacture certain cancer drugs due to low margins. He noted that over 100 cancer drugs are already under price caps under the DPCO, adding that the company lacks access to many drugs due to low prices and margins. ICICI Securities' Abdukader Puranwala told CNBC TV18 that the 30% margin cap is not new to the market and is still better than the anticipated 16% figure. Upstox reports that the 30% cap applies to trade margins and does not automatically translate into an equivalent reduction in manufacturers' realisations or profits, with the impact on their earnings uncertain without assessing product-level exposure. The 30% margin cap is not new to the market and is still better than the anticipated 16% figure, as noted by multiple reports.
The Supreme Court will next hear the matter on October 27, providing the industry with a timeline for potential regulatory changes. As reported by CNBC TV18, this regulatory framework represents a significant shift in how oncology drug pricing is managed in the Indian healthcare sector, with implications for both pharmaceutical companies and healthcare providers across the industry. The latest NPPA measure expands on the regulator's 2019 initiative, under which trade margins on 42 anti-cancer drugs were capped at 30%, resulting in price reductions for hundreds of medicine brands. The NPPA has invoked Paragraph 19 of the Drugs (Prices Control) Order (DPCO), 2013, to implement trade margin rationalisation (TMR), with manufacturers required to notify the regulator of revised prices within seven days of the Gazette notification. Hospitals, retailers and other sellers will be required to charge the revised prices from November 9, 2026.
