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What is Pharma Franchise Model? A blog about how franchising works in pharma.

In this article I will tell you about the Pharma Franchise Model and how it is different from other franchise models. Along with Pharma Franchise, I will drop you some basic knowledge about the entire franchise model. Franchise marketing meaning varies from industry to industry. A franchise is a model of distribution and represents the most common business structure that enables the franchisor to capture recurring business from their franchisees. The franchisees are then able to earn profits from the same set of rules, systems and standardized products sold by other franchises across the country. In today's world of marketing, franchising has emerged as a lucrative option for new ventures as it simplifies and streamline the process of starting a business. With so much advanced equipment, efficient manpower, trained professionals etc., many entrepreneurs find it financially rewarding to take up a franchise business. What is Franchising? Franchising is a business strategy that involv

Drug Price Control Order (DPCO)

Drug Price Control Order (DPCO) is an order issued by center government under the essential commodities act which enables NPPA (National Pharmaceutical Pricing Authority) to fix ceiling price of essential and life saving medicines to ensure these medicines at affordable price to general public.

Price control over drugs was first introduced in India as Drug (Display of Prices) Order, 1962 and the Drug (Control of Prices) Order, 1963. After that Drugs (Price Control) Order of 1966, Drugs (Price Control) Order of 1970 - issued under the "Essential Commodities Act, 1955, Drugs (Price Control) Order 1979 (following the Drug policy, 1978), Drugs (Price Control) Order of 1987 (following the Drug policy, 1986). These policies were based upon the principle of effective control over prices of essential drugs and later bulk drugs as well as availability of drugs.

After that Drug policy of 1994 were implemented through Drugs (Price Control) Order, 1995. The control over prices was to be on the basis of cost of production with allowance being given for post production expenses. As per the criteria of 1994 policy, a list of 74 bulk drugs was identified and these drugs as well as formulation based on these drugs were brought under the price control regime.

After that a new pharmaceutical pricing policy was introduced in the year 2002 but never implemented and the 1994 drug policy continued to be applicable.

There was need of enabling industry growth with attendant socio, economic benefits along with balancing the declared objective of providing better health care including making available essential medicines at reasonable prices to all. The Drug Policy, 1994 needs to be revised to meet the challenges brought about by the competitive international pharmaceutical industry in a globalised economic environment, as much as meeting the country's requirements for safe and quality medicines at reasonable prices. Therefore, the Government introduces the National Pharmaceuticals Pricing Policy, 2012. NPPA, 2012 replaced the Drug Policy, 1994.

The regulation of price under NPPA, 2012 is on the basis of regulating the price of formulation through Market based Pricing (MBP) which is different from drug policy, 1994 which was on Cost Based Pricing (CBP) basis. The formulation is regulated by fixing a ceiling price (CP). Ceiling price of any formulation is fixed by taking simple average price of all brands of that formulation having equal to or more than 1% market share of the total market share of that formulation.

Key Principles Of National Pharmaceuticals Pricing Policy 2012:
The key principles for regulation of prices in the National Pharmaceuticals Pricing Policy 2012 are:

(1) Essentiality of Drugs
(2) Control of Formulations prices only
(3) Market Based Pricing

On the basis of NPPA, 2012, a new Drug (Price Control) Order, 2013 was implemented and are in effect till date.


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