In a major blow to chemists charging hefty margins from consumers, the government has decided to limit trade margins on all medicines sold in the country. The move will take away companies’ freedom to decide trade margins for almost three-fourths of the market. Currently, trade margin cap is prescribed for only one-fourth of the Rs 35,000-core domestic pharmaceutical market.

The margin for this three-fourth of the market will be fixed at 10% of the maximum retail price (excluding excise duty and other applicable levies) for wholesalers and 20% for retailers, government sources said. Consequently, the retail prices of medicines may come down. A notification to this effect is likely in the next couple of weeks. The ministry is expected to amend the drug price control order of 1995 soon to introduce the caps.

Sources said margins for a smaller fraction of the market

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