Shares of hospitals and healthcare services providers Apollo Hospitals Ltd., Max Healthcare Ltd., Fortis Healthcare Ltd., Healthcare Global Ltd., Global Health Ltd. among others are likely to see further pressure on Monday, October 19 after the government capped trade margins on 138 non-scheduled oncology drugs through an NPPA order issued earlier. The announcement was made over the weekend.
As per the new norms, trade margins are capped at 30% of the Maximum Retail Price (MRP) and the revised prices will be effective from November 9, 2026.
The 137 drugs include branded drugs, high value molecules like Bevacizumab, among others.
According to analysts that CNBC-TV18 spoke to, the Hospitals industry will see a negative business impact as their hospital pharmacy margins will take a hit after the decision. They added that it will have to be the hospitals that absorb the margin squeeze.
As a result of this move, analysts expect near term headwinds to the Average Revenue Per Operating Bed (ARPOB) and margins for oncology focused hospitals such as Healthcare Global.
According to brokerage firm Nuvama, they expect a 4% impact on Max Healthcare, and a 1% to 2% impact for others with pressure on their ARPOBs. It added that hospitals are likely to offset this impact with other price hikes.
The Supreme Court will next hear the matter on October 27.
In an interaction with CNBC-TV18 on October 9, BS Ajaikumar, the Chairman of HealthCare Global said that pharma companies do not want to manufacture certain cancer drugs due to the low margins.
He said that over 100 cancer drugs are already under price caps under the DPCO, adding that the company does not have access to a lot of drugs due to low prices and margins.
Abdukader Puranwala of ICICI Securities also told CNBC-TV18 that the 30% margin cap is not new to the market and is still better than the anticipated 16% figure.
Shares of Apollo Hospitals have declined 11.5% in the last one month, while those of Max Healthcare, Fortis Healthcare, Healthcare Global, have declined 20%, 18% and 16% respectively during the same timeframe.