Indian hospital shares surge as government moves to cap margins on cancer drugs

On Friday, shares of major Indian hospital operators—including Fortis Healthcare, Apollo Hospital Enterprises, Max Healthcare Institute, Global Health, Yatharth Hospital & Trauma Care Services, Krishna Institute of Medical Sciences, Narayana Hrudayalaya and Artemis Medicare Services—gained between 2% and 5% in intra-day trading, lifting the BSE Hospitals index 1.5% versus a 0.32% rise in the broader Sensex. The surge was triggered by reports that the government intends to cap trade margins on non-scheduled anticancer drugs at 30% of the maximum retail price, covering 110 medicines, 35 of which are patented.

The National Pharmaceutical Pricing Authority has approved the cap in principle, and the Directorate General of Health Services will issue the final list by October 14. Officials estimate the measure could lower retail prices by 20-70% and save patients around ₹2,500 crore annually. ICICI Securities expects a 2-4% impact on hospital EBITDA margins, pending further details. The policy follows a recent Supreme Court concern over large price gaps between retailer and retail prices for essential medicines.