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February 26, 2000

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Sector report: Pharmaceuticals

Dun and Bradstreet India

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Input for Bulk Drugs
Chemicals and intermediates

Input for Formulations
Bulk Drugs

Key Players
Glaxo India, Novartis India, Cipla, Hoechst Marion Roussel, Ranbaxy Laboratories, Dr. Reddy's Laboratories, Torrent Pharmaceuticals, Lupin Laboratories, Knoll Pharmaceuticals, Kopran, Pfizer, Nicholas Piramal, Rhone Poulenc (India), Wockhardt, SmithKline Beecham Pharmaceuticals, Sun Pharmaceuticals, Wyeth Lederle.

Tax Structure

Customs Duty (%)    
Item 1998-99 1999-2000
Bulk drugs 15-35 16.5-38.5
Intermediates 15-35 16.5-38.5
Excise Duty (%)    
Item 1998-99 1999-2000
Bulk drugs 18 16
Formulations 15 16

Review

  • Pharmaceutical products contribute about 2 per cent of total excise revenues.
  • Higher import duty imposed on bulk drugs in the Union Budget 1999 has put the domestic formulations industry under considerable pressure.
  • Foreign Direct Investment limit under automatic approval has been increased to 74 per cent from 51 per cent for all bulk drugs, their intermediaries and formulations.

Expectations from the Budget

  • Currently formulations and bulk drugs have a uniform excise duty of 16 per cent. The pharmaceutical industry expects a slight lowering of this rate if the number of rates of excise duty is reduced further.
  • The government currently levies a uniform basic customs duty of 35 per cent on all raw materials imported by the pharmaceutical industry. The industry expects this basic duty to reduce by 5 per cent. A Special Additional Duty of 4 per cent is also being imposed presently. The pharmaceutical industry also desires the removal of SAD.
  • In order to promote domestic research and development, the pharmaceutical industry desires the following:

    a. Companies investing substantial money in R&D should be exempted from the Drug Price Control Order and,

    b. Tax exemption from R&D licensing monies received from abroad as well as dividends received from abroad.

ALSO SEE:

What will Yashwant Sinha do?

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Fiscal report card

SECTOR ANALYSIS:




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