Influence of TMR highlights the significance of being agile and adaptable when addressing regulatory changes.
Influence of TMR highlights the significance of being agile and adaptable when addressing regulatory changes According to a report by market research agency Datawise, the introduction of Trade Margin Rationalisation (TMR) for various medical devices during the Covid-19 pandemic led to increased sales for importers and standalone pharmacies, while manufacturers and wholesalers experienced a decline in sales. This highlights the importance of being agile and adaptable to regulatory changes. The report has not been released by the Department of Pharmaceuticals (DoP).
Influence of TMR
The study, titled “Impact of the Drugs (Price Control) Order (DPCO, 2013) on the Price of Eight Medical Devices, on Industry and Consumers in Terms of Availability and Affordability,” was prepared for the National Minorities Development and Finance Corporation. It revealed that data on sales of essential Covid devices after the TMR notification showed that importers were the main beneficiaries, with a significant 49% increase in sales, indicating their ability to quickly adapt to the new trade margins.
Standalone pharmacies experienced a moderate sales increase of 31%, likely due to their direct customer interactions and the flexibility to adjust prices or inventory based on market changes, according to the report.
In contrast, manufacturers saw a substantial 81% decline in sales, indicating difficulties in adjusting production or pricing strategies post-TMR. Wholesalers also experienced a significant 45% drop in sales, suggesting potential supply chain disruptions or issues with their pricing models.
“The sales boost among importers and standalone pharmacies following the TMR notification indicates that these entities were better equipped to adapt to the changes. This underscores the crucial role of agility and adaptability in navigating regulatory shifts in the pharmaceutical market,” the report stated.
For manufacturers and wholesalers experiencing a decline in sales, this could indicate a need for more adaptable strategies to adjust their pricing or distribution models in response to new trade margins. It may be beneficial for these parties to reassess their pricing structures, supply chains, and marketing approaches to better align with the updated trade margin environment, according to the report.
The report also emphasized the importance of improved collaboration and communication among stakeholders and regulatory bodies to ensure a smoother transition following the implementation of the Trade Margin Rationalization (TMR). Providing support mechanisms, such as guidelines or assistance programs, could help manufacturers and wholesalers manage pricing and production challenges, thus stabilizing their sales.
Furthermore, utilizing technology and data analytics to quickly respond to market shifts and consumer preferences after TMR implementation can help all parties stay competitive and adaptable in the changing landscape.
The study concluded by noting that the notification of the Drug Price Control Order (DPCO), 2013, has significantly affected the availability and affordability of essential medical devices for consumers, standalone pharmacies, and hospital pharmacies.
Accessibility in rural areas has significantly improved, with varying effects across different geographical regions. The cost of consumer devices has become more affordable, leading to a decrease in out-of-pocket expenses following the (DPCO, 2013) notification, particularly for essential medical devices such as pulse oximeters, digital thermometers, and BP monitors.
The (DPCO, 2013) notification resulted in price reductions between 10.8% and 44.4% for the eight medical devices studied by 2020. The most notable reduction was for glucometers at 44.4%, followed by nebulizers at 37.5%. On average, the price reduction across all devices was around 25.74%. The medical devices analyzed in the report include cardiac stents, knee implants, oxygen concentrators, pulse oximeters, glucometers, BP monitors, nebulizers, and digital thermometers.
The decreased prices of medical devices led to an increased demand, enhancing both their availability and affordability for consumers. Oxygen concentrators, in particular, showed higher demand across various regions compared to other medical devices in the country. Manufacturers and importers are experiencing greater demand for these devices compared to other industry stakeholders.
“There have been price adjustments across all medical devices, with nebulizers reduced by 39%, digital thermometers by 32%, and pulse oximeters and glucometers by 21%. These price reductions were significant and involved establishing ceiling prices for all medical devices. As a result, there has been a substantial increase in the sales of these medical devices,” the report added.
The reduction in prices has rendered these devices more economically accessible for consumers, thereby enhancing their availability. Furthermore, both standalone pharmacies and hospital pharmacies have observed increased sales in the aftermath of the Covid-19 pandemic. A study indicates that the domestic market value of these medical devices stands at around US$ 2 billion, indicating a favorable impact on the sustainability of the medical device industry within the market.
The National Pharmaceutical Pricing Authority implemented the provisions of the Drug Price Control Order (DPCO), 2013 in June 2021 to regulate the pricing of oxygen concentrators. In July 2021, it extended this regulation to include pulse oximeters, blood pressure monitoring machines, nebulizers, digital thermometers, and glucometers, capping the trade margin. Coronary stents and orthopedic knee implants were already subject to price regulation in 2017.
Following the notification from the Trade Margin Rationalization (TMR), manufacturers experienced a surge in demand of approximately 56%, while importers saw a growth of 54% in demand. Conversely, standalone and hospital pharmacies witnessed a decline in demand by 24% and 30%, respectively, with wholesalers experiencing a significant decrease of 43%, according to the study.
“This decline may indicate several factors, such as adjustments in pricing or shifts in consumer behavior in response to altered trade margins,” stated the report.
“These findings could signal changes in supply chain dynamics and consumer preferences post-TMR. One potential inference is that the adjusted trade margins have prompted manufacturers and importers to swiftly adapt to market demands, resulting in an increased supply of Covid essential devices. However, the decreased demand among pharmacies and wholesalers may indicate challenges in passing on the benefits of trade margin rationalization to end consumers or a potential change in purchasing behavior due to fluctuating prices,” it further explained.