India has raised serious concerns over the inordinate delay by Sri Lankan authorities in clearing over 1,000 import licences of pharmaceutical products.
The Daily FT learns that the Indian Government has conveyed its disappointment in writing to the relevant authorities including the Health Ministry.
The Indian companies have alleged undue pressure on them to reduce the Maximum Retail Price (MRP) of their products, with reference being made to those prevalent in India or that of medicines locally manufactured in Sri Lanka.
Sources opined that these comparisons are being made in an ad hoc manner without taking into account the cost of compliance, logistics, and shipping, as well as the pressure brought about by the depreciation of the Sri Lankan rupee.
Another contentious issue is that informal price control is being exercised on medicines even when they are not part of the control list of the Sri Lankan Government.
Indian Pharmaceutical Alliance sources charged that the non-tariff barrier being imposed on Indian products will impact the availability of medicines in Sri Lanka and could lead to possible shortages in the near future. It was pointed out that such prolonged challenges are also deterring Indian companies of high reputation from continuing their presence in the Sri Lankan pharma market and expanding their supply to bring in the most modern formulations.
Sources said companies usually maintain stock for three months, however, some companies have reported that at least 5-6 of their products are already out of stock.
It was pointed out that drug pricing is a core public health mechanism. A balanced drug pricing framework ensures affordable access to essential medicines, protects patients from high out-of-pocket costs, sustains domestic pharma manufacturing capacity, and strengthens national health security.
Globally, countries adopt varied drug pricing frameworks, regulating prices mainly for medicines essential to public health while allowing market-based pricing for other medicines and innovative products. This pragmatic approach is widely followed in countries such as France, India, Italy, Brazil, the UK, and Canada through a mix of regulation and negotiated pricing under public procurement and insurance systems.
The World Health Organisation (WHO) actively endorses this model, advocating targeted, transparent, and predictable pricing policies focused on essential medicines, supported by competition, stakeholder consultation, and periodic review to ensure quality and uninterrupted supply, sources emphasised.
They argued that India’s drug pricing framework is a good example and reflects global best practices. It follows a market-based system, with price regulation only for essential medicines aligned with the WHO list. The list of price-controlled medicines is developed through stakeholder consultation and reviewed once every five years, providing policy stability.
The framework is implemented by the National Pharmaceutical Pricing Authority (NPPA) under the Drug Price Control Order (DPCO), 2013.
Ceiling prices are fixed through a simple and transparent method, based on the average price of products with significant market share. Only about 18% of medicines are under price control, and price increases for those other than essential medicines are allowed only in line with inflation (i.e. basis Wholesale Price Index). In practice, due to intense competition, average annual price increases have remained in the range of 6-6.6% over the past years.
‘This stable and predictable framework, combined with strong market competition, helps keep prices affordable while ensuring quality and reliable supply, in line with global best practices,’ they pointed out.
For Sri Lanka, an effective pricing framework would be one that ensures sustained availability of medicines, quality, and investment in manufacturing to support self-reliance. As an import-dependent market, pricing policies need to reflect compliance, logistics, and financing costs, it was pointed out.
Recognising higher per-unit costs will help attract quality-assured suppliers and encourage manufacturing investment.
‘A simple and predictable pricing regime can reduce uncertainty, support continuous supply, and enhance Sri Lanka’s attractiveness as a pharmaceutical manufacturing destination,’ they added.
India’s experience demonstrates that market-based pricing with targeted regulation can achieve affordability while sustaining quality, supply, and innovation – an approach that can be adapted as per the needs of Sri Lanka.
As per the NMRA Act of 2015, a pricing mechanism is stipulated to decide the MRP in consultation with all stakeholders, which primarily includes the industry. However, it is understood that concerns of the industry were not taken into account.
Even when exports are undertaken from Pharmaceutical Inspection Co-operation Scheme (PICS)-approved plants (higher than the WHO Good Manufacturing Practice (GMP) standard), at the time of submission of the dossier, bio-equivalence data is also required, which adds to costs. When it is not a PICS plant, GMP inspection is also sought, which adds to cost. Often, full-time stability data (2-3 years) is asked for, while the global practice is for accelerated stability data (6 months). All this increases compliance costs and it takes 2-3 years for a medicine to come into the Sri Lankan market.
In Sri Lanka, 61 molecules are under price control, which is approximately 30% of the market. Price of medicines has also not been allowed to increase for more than 10 years.
For medicines outside the designated control list, price control is being informally exercised during registration of products, during clearances of import licences, and also during reregistration of medicines. This is acting as a deterrent for good companies to continue and/or register new formulations. The frame of reference for seeking a reduction in price is also not clear, sources alleged.
‘Sometimes, the comparison is made to prices in India, and sometimes to those produced locally. In both cases, the economics are completely different. There are high compliance costs, logistics costs, labelling requirements etc. that need to be factored in,’ they pointed out.
There are also ambiguities/uncertainties in the regulatory process as sometimes the NMRA has disqualified the registration of a medicine based on a ‘need clause,’ determining that the country does not need that particular medicine.
Industry sources warned that over the years, some brands have exited the Sri Lankan market including GlaxoSmithKline, LEO, Sanofi, Roche, Nova etc. The Indian pharma companies of high reputation have also reduced their presence in Sri Lanka and are hesitant to register their new products.
The immediate pressing concern is the delay in clearing more than 1,000 import licences for pharmaceutical products. The NMRA insists on lowering the MRP, even for products that are not there in the control list.
The pharmaceutical companies have also highlighted the appreciation of the US dollar, which is not being taken into account by the NMRA.
Licences are believed to be pending since January 2026 and potential shortages in the market could be likely by June-July 2026.