HCG Group of Hospitals Chairman & Managing Director Ajai Kumar has strongly criticized the government's decision to cap trade margins at 30% for non-scheduled cancer drugs, calling it 'thoughtless interference' that could prevent new treatments from reaching Indian patients. According to Kumar's statements to NDTV Profit, while the measure may not significantly impact HCG's earnings - as most drugs are already under price control - he expressed concerns about hundreds of drugs becoming unavailable in India due to low costs. Kumar highlighted that Indian manufacturers are hesitant to produce essential cancer drugs like cisplatin and Taxol due to the pricing pressure, and questioned the long-term impact on research and development investment. He emphasized that Indian oncology has matured and is now competing globally, with identical care costing 10-20 times more in other nations.
The Centre has decided to cap trade margins for all non-scheduled anti-cancer drugs at 30 per cent of the maximum retail price (MRP), according to official sources cited by ANI and Mint. This decision covers 110 non-scheduled cancer drugs, including branded, generic, domestic and imported drugs, with 35 of these being patented cancer medicines. The order is expected to be announced later this month, with the proposed measure covering 110 medicines as reported by Upstox Securities. The announcement comes against the backdrop of a sharp intervention by the Supreme Court last month over the pricing of cancer medicines, particularly the huge gap between the price at which medicines reach retailers and the MRP charged to patients. The Directorate General of Health Services (DGHS) will finalise the list of medicines to be covered, following which the National Pharmaceutical Pricing Authority (NPPA) will take a decision and issue a notification.
The move is expected to reduce MRPs of cancer drugs by up to 70 per cent and generate estimated annual savings of ₹2,500 crore to ₹3,500 crore, according to three senior government officials familiar with the matter as reported by Mint. Analysts anticipate this will only minimally affect hospitals' EBITDA by 1% to 4%, as chemotherapy drugs are already subjected to price controls. According to NDTV Profit, the cap is less severe than the 16% that the market anticipated, with shares of multispecialty hospital companies rising following the announcement. HCG is more susceptible to this measure than Max Healthcare (where oncology represents approximately 24% of total revenue) and Apollo Hospitals and Fortis Healthcare (where oncology represents approximately 16% of total revenue), as approximately 89% of HCG's total revenue is attributable to oncology services. Kumar stated that HCG's EBITDA margin is approximately 20% and the company can maintain its return on capital despite adverse effects.
The committee has found trade margins ranging from 170 to 700 per cent for cancer drugs at various outlets, as reported by Business Standard and Mint. This significant variation in mark-ups highlights the need for regulatory intervention. The Centre had earlier capped trade margins for 42 cancer drugs in 2019, resulting in reported annual savings of ₹984 crore across 526 brands. According to Mint, studies by market data groups and the National Pharmaceutical Pricing Authority (NPPA) revealed staggering trade margins ranging from an average of 170% to up to 700% on cancer therapies, leaving patients vulnerable to excessive retail mark-ups by distributors and private hospitals. The anti-cancer drug market comprises approximately 225 drugs and 500 formulations, with an estimated turnover of ₹12,500 crore, according to industry data cited by Mint. Scheduled medicines account for around ₹2,250 crore of this market.
The decision marks a first step towards trade margin rationalisation (TMR), even as the Department of Pharmaceuticals (DoP) and the National Pharmaceutical Pricing Authority (NPPA) hold industry consultations on price mark-ups for essential medicines. On September 29, a bench of Justices Vikram Nath and Sandeep Mehta questioned the Centre over a cancer drug that was reportedly supplied to retailers for around ₹2,700 but carried an MRP of ₹27,000 - a nearly ten-fold difference. The court questioned why such large price differences were allowed for essential and life-saving medicines and pointed out that when expensive medicines are used under government health schemes, the financial burden can ultimately fall on taxpayers. The Bench also raised concerns about corporate hospitals requiring patients to buy medicines from their in-house pharmacies, particularly when treatment is being reimbursed through government schemes. The matter is scheduled to come up again on October 12, 2026, with the government planning to submit its comprehensive pricing report before the Supreme Court bench.
