Healthcare stocks slide after SC questions medicine price gap
Nifty Healthcare index plunges 2.57% as Supreme Court scrutinizes the massive price gap between retailer and consumer medicine costs.
The Indian healthcare and pharmaceutical sectors faced a massive sell-off on Wednesday, as the Nifty Healthcare index witnessed a sharp decline. This market turbulence follows a significant observation by the Supreme Court regarding the substantial disparity between the prices at which medicines are sold to retailers and the prices paid by everyday consumers.
Nifty Healthcare Index Plummets
The healthcare sector came under intense pressure, with the Nifty Healthcare index falling by 424.90 points, a staggering 2.57 per cent, to settle at 16,137.75. The downturn was widespread, affecting almost every major player in the sector. Out of the 20 stocks comprising the index, 19 were trading in the red.
The losses were led by several industry giants:
- Fortis Healthcare saw a sharp decline of 6.33 per cent.
- Apollo Hospitals dropped by 5.70 per cent.
- Max Healthcare fell 5.33 per cent.
- Glenmark Pharmaceuticals declined 4.37 per cent.
- Zydus Lifesciences and KIMS both fell over 3 per cent.
- Other notable losers included Sun Pharma, Cipla, Torrent Pharma, and Biocon.
In a rare instance of resilience, Laurus Labs was the sole stock to maintain a positive trajectory, gaining a marginal 0.05 per cent.
Supreme Court Scrutinizes Price Disparities
The market's reaction follows a critical hearing in the Supreme Court on Tuesday. A bench comprising Justices Vikram Nath and Sandeep Mehta raised concerns over the wide gap between the Price To Retailer (PTR) and the Maximum Retail Price (MRP) charged to consumers. The court questioned why a uniform cap could not be imposed to prevent excessive markups, particularly for life-saving drugs.
The court highlighted the extreme nature of these price differences. Justice Sandeep Mehta cited a specific instance involving a cancer drug, noting that while the price to the retailer was approximately Rs 3,000, the price charged to the consumer reached nearly Rs 27,000. Such a massive disparity has prompted the court to demand a closer look at current pricing structures.
Impact on Public Health Schemes
The bench also expressed concern regarding the impact of high medicine costs on public funds. Specifically, the court noted that when patients undergo treatment under government-funded schemes like Ayushman Bharat, the high cost of medicines—often purchased from a hospital's own in-house pharmacy—places a significant burden on the state.
Furthermore, the court questioned the rationale for excluding non-scheduled medicines from the price-control regime established under the Drugs (Prices Control) Order, 2013.
Representing the Centre, Solicitor General Tushar Mehta acknowledged the concerns raised by the petitioners and stated that the government would need to find a way to balance these interests. The Supreme Court is scheduled to continue hearing this significant matter on October 12.