Alternative Explanations


We find that the sales volumes of regulated drugs decreased post DPCO 2013. We identify alterative explanations for this decrease and rule each one out and argue that the decline is due to reduced detailing efforts by pharmaceutical firms.

Retailer Resistance

DPCO 2013 fixed the retailer margin for regulated molecules at 16%, compared to 20% for unregulated molecules (Mukherjee 2013). Press reports suggest that wholesalers and retailers insisted on the old margins so pharmaceutical firms had no option but to sell to the channel at low prices (Unnikrishnan and Unnikrishnan 2014), cutting down their own margins given the price cap on MRP. As a result, 65% of the pharmaceutical firms restored older trade margins (Vaitheesvaran 2013). This led to further lowering of manufacturer margins, thus resulting in even lower motivation to detail.

Lowered Production of Regulated Drugs

DPCO 2013 mandated that firms continue the production of regulated drugs (DPCO 2013). Firms may have lowered as much as they possibly could. We place our argument that if the doctor had prescribed a specific SKU and the same is not available in a retail store; the retailer stands to lose that business. Hence, as long as doctors were prescribing (especially the ones that are influenced by detailing – as we show), we argue that the reduction in detailing may be the reason the firms were attempting to reduce the production levels to the extent possible (and allowed).

Decline in Disease Prevalence

We extracted annual statistics on disease prevalence in India (number of cases registered in India from 2009 to 2015) from IndiaStatHealth (2023). We find that, overall there is no significant decline in number of cases post 2013 for few common disease categories which are covered under DPCO 2013 such as – i) acute respiratory infection, ii) circulatory system diseases including heart, hypertensive and cerebrovascular diseases, iii) diabetes[1], iv) HIV/AIDS, v) malaria, and iv) pneumonia; disease prevalence across ailments systematically increased from 2013 (refer Table W13 in Web Appendix K). Hence, we can rule out decrease in disease cases as the reason for the decline in sales volumes of regulated SKUs.[1] In the case of Diabetes, we only have data on number of deaths in a year. For all other categories, we present the number of cases.

Use the Slider to Select Time Period to View the Number of Cases

(number of deaths in the case of circulatory system diseases)

Year Acute Respiratory Infection Circulatory System Diseases Diabetes HIV/AIDS Malaria Pnemonia
2009 28,240,346 289,255 34,488 217,781 1,563,574 801,391
2010 26,140,046 289,571 34,455 313,161 1,599,986 785,888
2011 26,300,208 278,090 33,593 448,860 1,310,656 715,226
2012 31,684,628 304,757 34,891 516,412 1,067,824 779,794
2013 33,423,107 269,062 28,015 777,485 881,730 703,532
2014 34,814,636 337,375 33,327 810,339 1,102,205 712,028
2015 37,485,713 392,771 40,293 1,157,787 1,169,261 671,262

Please deselect any item from the Legend below the X-Axis to view the results. 

Shift to Alternative Medicine

We found that the overall penetration of AYUSH (Ayurveda, Yoga and Naturopathy, Unani, Siddha, Sowa-Rigpa and Homeopathy) was at 6.9% (in the case of outpatient care) with no significant difference between urban and rural areas (Rudra et al. 2017). This has been highlighted in popular press as well. For instance, Singh (2015), based on nationally representative survey (National Sample Survey Office – NSSO), claims that 90% of Indians in 2014, preferred allopathy over AYUSH and that there was no significant difference between urban and rural populace. Further, Baruah (2023), using the same survey data, suggests that AYUSH usage has in fact declined since 2014. Specifically, adoption rate of allopathy has increased from 90.26% in 2014 to 93.88% in 2018, with AYUSH penetration dropping from 6.43% to 4.54% (Baruah 2023). This declining trend provides suggestive evidence that our sales decline of regulated SKUs may not be due to patients shifting to alternative medicine.

Introduction of New Drugs

Post DPCO, Dey (2014) notes that there has been over 87% decline in new drug launches. We extracted new drug approval data from Central Drugs Standard Control Organization (CDSCO 2023), and find that there indeed has been a significant decline in new drugs approved since 2012 (Figure W7 below). Thus, we eliminate new drug launches as the potential explanation for our findings.

Use Slider to Select Time Period to View the Number of New Drugs Introduced

Year New Drugs Approved
2001 39
2002 57
2003 39
2004 79
2005 122
2006 162
2007 189
2008 271
2009 217
2010 224
2011 143
2012 44
2013 35
2014 63
2015 29
(Data source: CDSCO 2023)


Baruah, Palash (2023), “AYUSH Medicine Usage Declining, NSS Data Shows. Integrate with Allopathy for Better Reach,” (accessed 15 November 2023),

CDSCO (2023), “List of New Drugs Approved”, (accessed 22 September 2023),

Dey, Sushmi (2014), “80% Drop in New Drug Launches as Price Control List Expands,” (accessed 11 November 2023), https://timesofindia.indiatimes

DPCO (2013), “Drug Price Control Order 2013 – National Pharmaceutical Pricing Authority”, (accessed 18 October 2021),

Mukherjee, Rupali (2013), “Drug Companies to Raise Trade Margins”, The Times of India, (accessed 24 March 2017), /india-business/Drug-companies-to-raise-trade-margins/articleshow/22845943.cms

Rudra, Shalini, Aakshi Kalra, Abhishek Kumar, and William Joe (2017), “Utilization of Alternative Systems of Medicine as Health Care Services in India: Evidence on AYUSH Care from NSS 2014,” PloS one, 12 (5), e0176916.

Singh, Mahendra (2015), “90% of Indians Prefer Allopathy over AYUSH,” (accessed 15 November 2023), https://timesofindia.indiatimes

Unnikrishnan S, and C.H. Unnikrishnan (2014), “No End to Stand-Off Between Drug-Makers, Trade Association”, LiveMint, (accessed 24 March 2017), /9dsO1cFhaDjxq44LIsMR8N /No-end-to-standoff-between-drug-makers-trade-association.html

Vaitheesvaran, Bharani (2013), “Big Pharma in No Hurry to Restore Trade Margins for Distributors”, Hindu Business Line, (accessed 24 March 2017), companies/big-pharma-in-no-hurry-to-restore-trade-margins-for-distributors/article5501362.ece