A draft rule placing a ceiling on pharmaceutical prices may reduce hospital earnings before interest, taxes, depreciation, and amortisation by approximately 1.5% to 3–4%, with the extent of the impact varying according to the proportion of a facility's medicines subject to price controls, according to Kewal Handa, President of Samarth Life Sciences and former Managing Director of Pfizer. The forecast comes as questions mount over how hospital systems determine the prices they charge for medications.
According to Handa, pharmaceutical products represent roughly 10% of total hospital revenue, with combined profit margins of approximately 30%. Should price caps be extended to a broader range of products, hospital profit margins may face downward pressure; Handa noted that revenues from these items account for no more than 10%, while average margins across hospital-sold products stand at approximately 30%.
Executives in the healthcare industry argued that profit margins alone offer an incomplete picture when evaluating the effects of such regulation. Healthcare Global's Non-Executive Chairman BS Ajaikumar contended that access to vital medicines, with oncology treatments as a particular example, represents a pressing concern in certain situations. He noted that certain cancer treatments are already hard to obtain because their prevailing prices are too low to sustain profitable manufacturing, and Ajaikumar questioned how to ensure medicines remain within reach for patients who need them.
Jupiter Life Line Hospitals CEO Ankit Thakker contended that evaluating individual medication costs within hospital settings versus external markets fails to account for the broader financial realities of hospital operations. Thakker noted that pharmaceuticals and disposable supplies represent just one component of a broader healthcare operation, and that overall business performance is the appropriate lens through which to assess hospital financial returns, adding that facilities charge fees for delivering medical services rather than for products alone.
Leadership at the firms also voiced apprehension over patients sourcing medication from outside hospital settings. Ajaikumar raised concerns about counterfeit medications and the potential legal exposure hospitals face when a patient administers medicine obtained from an external pharmacy and subsequently experiences adverse effects.
Handa indicated that the effects on his operations may reach beyond healthcare facilities to encompass drug manufacturers and the people they serve. Patents on numerous medications are covered by patient-access schemes designed to reduce the financial burden of costly treatments, he stated. Stricter price regulations may alter the financial viability of these initiatives, with possible implications for those who rely on them for treatment.
Handa also contended that applying separate pricing structures across hospital and retail channels would pose practical difficulties, given that identical products often move through both markets. Pricing tied solely to hospital procurement costs could weigh on the earnings of drug manufacturers, he noted.
These conversations are unfolding as calls for tighter oversight of private healthcare continue to build. Ajaikumar argued that any regulatory framework ought to prioritise care quality and patient outcomes, rather than relying primarily on price controls.
Thakker of Jupiter Life Line maintained an optimistic outlook on the sector, even amid prevailing uncertainty. A gap between healthcare supply and demand persists in India, leaving the hospital sector with notable room for growth and investment, he stated.
According to Handa, narrowing the scope of policy interventions may offer a path to lowering costs without undermining the financial structures of hospitals and pharmaceutical manufacturers. Referencing initiatives such as Ayushman Bharat, he raised the possibility of extending subsidies on high-cost patented drugs to low-income patients who lack the financial means to cover treatment.
