Supreme Court Asks Centre to Form Panel on Pharma Gifts to Doctors; Mankind, Zydus Shares Slip

The Supreme Court on Thursday directed the Union government to set up a committee to examine whether pharmaceutical companies' marketing practices, including gifts, hospitality, travel and other benefits offered to doctors, should be brought under a statutory regulatory framework. Shares of several drug makers fell soon after the order.

A bench of Justices Vikram Nath and Sandeep Mehta passed the direction while hearing a plea seeking binding rules on how drug companies promote their products to doctors. During the hearing, Solicitor General Tushar Mehta told the bench that the Centre would form a three-member committee to study whether a law is needed and, if so, what shape it should take.

The gap the petition targets

The case dates back to a 2021 petition filed by the Federation of Medical and Sales Representatives Association. Its central argument is about asymmetry. Under the existing framework, a doctor who accepts gifts or inducements from a drug company can face disciplinary action. The company that offers those benefits, however, faces no comparable statutory penalty.

The Centre told the court that while rules already cover doctors, the question of regulating the companies themselves would be examined by the new committee. The panel is expected to take suggestions and objections from stakeholders before recommending whether legislation is required. The government has been asked to file an affidavit on compliance, and the matter will be heard again on January 29.

How the stocks reacted

Pharma shares came under pressure during Thursday's session. Around 11:50 am, Mankind Pharma was down 3.04% at Rs 2,424 on the NSE and Zydus Lifesciences had fallen 3.21% to Rs 1,116. Dr Reddy's Laboratories slipped 1.72% to Rs 1,183.10.

Losses elsewhere were smaller. Cipla was down about 1%, Glenmark Pharmaceuticals 0.8% and Lupin 0.7%, while Torrent Pharmaceuticals, Alkem Laboratories and Sun Pharmaceutical Industries each fell less than 1%.

The sharper fall in Mankind stands out because the company built much of its business on a large domestic sales force and prescription-led brands in India, the kind of model most exposed to any tightening of marketing rules. Companies that earn a bigger share of revenue from exports or US generics are less directly affected.

Part of a wider look at drug pricing

The order adds to the same bench's scrutiny of how medicines are priced and sold in India. In a separate set of public interest cases on drug prices, generics and prescription practices, the judges have questioned the wide gap between the price at which medicines are supplied to retailers and the maximum retail price printed on the pack.

At an earlier hearing, the court cited a cancer drug carrying an MRP of Rs 27,000 that was supplied to retailers for roughly Rs 2,700 to Rs 3,000, and asked why manufacturers should be allowed to set MRPs so far above trade prices. The bench has also asked whether a uniform trade margin could apply to medicines regardless of whether they fall under price control.

What it means

A committee is not a law, and its findings may take months. But the direction signals that the court wants accountability to extend to companies, not only to doctors. For investors, the near-term question is whether any eventual rules would raise compliance costs or force changes in how domestic-focused drug makers market their brands. For patients, the hope is that cleaner marketing eventually means prescriptions driven by medicine rather than perks.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.