Hospital, Pharma Stocks Fall After Government Caps Trade Margins On Non-Scheduled Anti-Cancer Drugs At 30%

Hospital and pharmaceutical stocks traded lower before recovering on Friday after the government capped trade margins on non-scheduled anti-cancer drugs at 30% of their maximum retail price (MRP).

The move is aimed at making cancer treatment more affordable by limiting the mark-up charged along the supply chain. While the impact on hospital earnings is expected to be modest, investors are watching how the new rule could affect companies dealing in cancer medicines.

The cap will apply to branded and generic drugs, as well as imported and domestically manufactured medicines, including patented products.

Share Price Movement

At 10:31 AM, Sun Pharma’s share price stood at ₹1,773.00 on the National Stock Exchange (NSE), up 0.75% from the previous session’s close. The stock touched an intraday low of ₹1,751. Meanwhile, Mankind Pharma share price stood at ₹2,371.70 on the NSE, down 0.35%. Natco Pharma share price stood at ₹798.55, up 0.40%. The stock touched an intraday low of ₹787.45.

Meanwhile, Dr Reddy’s Laboratories’ shares also recovered to ₹1,191.80 after touching an intraday low of ₹1,172.00. The stock will announce its second-quarter results on Friday, 23 October 2026, after the board meeting.

Drug Prices Could Fall By Up To 70%

Trade margins on non-scheduled anti-cancer medicines currently average around 170% and can reach as high as 700%, according to the information provided. The government expects the new ceiling to reduce prices by up to 70% in some cases.

The market covers around 225 drugs and 500 formulations, with an estimated turnover of ₹12,500 crore. Scheduled medicines account for roughly ₹2,250 crore of that amount.

The government estimates that patients could save around ₹2,500 crore every year once the margin cap takes effect.

Earlier Price Cap Led To ₹984 Crore In Savings

The latest move follows a similar exercise in 2019, when the National Pharmaceutical Pricing Authority (NPPA) capped trade margins on 42 selected non-scheduled anti-cancer drugs.

That measure reportedly cut the maximum retail prices of 526 brands by an average of 91% and generated annual savings of ₹984 crore.

An expert committee under the Directorate General of Health Services will now finalise the list of medicines covered by the new cap. Drug manufacturers will also have to maintain existing production levels to prevent shortages.

The government has clarified that the measure is directed at trade margins rather than manufacturers' selling prices or revenues.

Hospital Earnings Impact Seen As Limited

Goldman Sachs expects the effect on hospital chains to be limited. According to the brokerage, discussions with hospitals and industry participants suggest that most multi-speciality hospital operators are unlikely to see a significant impact on earnings.

The implications for pharmaceutical companies will depend on how the margin restrictions affect the sale and distribution of anti-cancer medicines. With the market covering both branded and generic drugs, the final list of medicines and the implementation of the cap will be important factors for investors to track.

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