The Union Budget of 2020 showcased mixed feedback from the pharmaceutical industry.
What does the budget mean for the pharma sector?
The Union Budget has been neutral to negative for the Indian pharma sector. That is evident from the manner several pharma corporations took hits within the aftermath of the Union Budget announcement. Here is why. There was a strong expectation that pharma manufacturers will be allowed to claim an input tax credit (ITC) on the GST that has already been paid on inputs. Currently, that facility is not available for pharma companies and that was becoming a problem because the GST on many pharma inputs had been hiked. However, but not extending that benefit to the Indian pharma companies, the budget has surely disappointed the Indian pharma industry. The reintroduction of the usual deduction up to Rs40,000 annually will be another big lift for domestic medicine consumption. The original limit used to be Rs.15,000 for medical reimbursements which now standard subsumed into the standard deduction. This move improves the affordability of good quality medicines within the Indian context which should profit pharmaceutical companies marginally. The National Health Scheme is intended to cover 10 crore families with a medical insurance cover of Rs.5 lakhs per annum While this is unlikely to be an enormous boost for the makers of generic medicines, it’s aiming to be an immense boost for allied services. The focus will be more on the delivery of medical services than on the manufacture of medicines. Thus hospitals, healthcare service providers, diagnostic centers, critical care centers, and last-mile connectors in the pharma value chain could benefit quite substantially from this trend. In fact, in terms of stock exchange returns, this budget might see a shift from the standard drug manufacturers to the service suppliers.
The Budget of 2020 highlights the derma franchise in Gujarat need for a cut on import duty Industry Body Calls for parts used in Medical Devices Industry. CII or Confederation of Indian Industry has come up with a cut on the import duty applicable to components utilized in the production of medical appliances. In its Pre-Budget memo, the trade body has conjointly pitched for a discount in duty on intraocular lenses (used in cataract surgery) from the prevailing 10 % to 5 %.
CII told that a high customs duty of 10 % applies to the import of intraocular lenses, moreover an overall duty of 25. 52 % (including GST) resulting in the more eminent health care service cost.
7.5% of customs duty is applied to the dental, surgical, veterinary apparatus and also 5% on their rest accessories and tools. Various types of medical tools have a partial or full exemption under multiple entries in different notifications at present, which can be rationalized, according to the CII.
Also, partial exemptions are available for particular items shipped or domestically procured by the research and development teams registered with the Department of Scientific and Industrial Research (DSIR).
This exemption is granted over and above 5 percent on such procurements but only on particularized items, and entire taxes/duty have to be given for the items, none in the defined list. This has inflated the value of R&D activities and resulted during an immense accumulation of GST input tax credits, according to CII.
The trade body has suggested a full exemption of customs duty on all items procured by R&D units, which, it said, will go a long way in reducing their costs furthermore, the cost of the bulk drugs or dosage forms manufactured.
Now addressing an important question that What is the difference between PCD and the Franchise?
The main difference between the two is the extent of the business. PCD works in more diminutive units with less area, more limited investment, and no particular target, while Pharma Franchise works on larger sections with a higher stake, the broader area of operations and defined objectives.
Dermatology is a component of advanced aid science that involves the treatment of skin, hair growth, and also the Oral cavity. The cosmetic products and the beauty care products also fall under the dermatology. Now the derma pharma franchise industry is growing due to the great demand for the derma commodities.
Industry Body Summons for Modification in GST On Active Pharmaceutical Ingredients
Industry body Confederation of Indian Industries (CII) has needed a cut in product and Services Tax (GST) applicable to Active Pharmaceutical Ingredients (APIs) in line with drug company formulations. CII has also directed that the customs duty and GST should be spared for all items procured by drug makers for research and development purposes.