It’s a pep pill for the pharma industry , with the budget retaining excise duty at 4% and reducing customs duty on certain life-saving drugs and heart devices.
Prices of 9 specified drugs, which are mainly biologics used for the treatment of cancer, HIV, hepatitis-B and arthritis, and two life-saving heart devices, will come down as a result of reduction in customs duty from 10% to 5% on medicines and bulk drugs, and from 7.5 to 5% on devices . “Reduction in customs and central excise duties for selected drugs will benefit patients,” said Indian Pharmaceutical Alliance secretary general DG Shah.
Other positives according to Piramal Healthcare director Swati Piramal are “excise duty remaining at 4% and proposed introduction of goods and services tax. Implementation of GST will reduce transaction costs which add up to 60% for the pharma industry.”
The market for life-saving drugs specified in the Budget, including for rheumatoid arthritis, Hepatitis B, cancer and arthritis, is marginal, and thus does not impact the industry. Multinationals and domestic companies, which are manufacturing these medicines or bulk drugs will be benefited by the proposal.
Says Satish Reddy MD and COO Dr Reddy’s : “Though there were no big moves for pharma, increased government spending on healthcare will have a positive impact . Extension for scope of provisions relating to weighted deduction of 150% on expenditure incurred on in-house R&D to all manufacturing businesses is a positive move.”
Customs duty has been reduced from 7.5% to 5%, and excise duty and CVD also exempted on two heart devices – artificial heart and patent ductus arteriosus and atrial septal defect occlusion devices. Says Hitesh Sharma, partner & national leader (health sciences) Ernst & Young, said: “This proposal is likely to rationalize the cost of treatment of heart ailments which are generally expensive for a large size population suffering from heart ailments in India.”