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Sector Focus : Pharmaceuticals

Pharmaceuticals: State of the industry (2000-01)

Pharmaceuticals: Tariffs

	Tariffs (per cent)
	Customs		Excise
	2000-01	2001-02	2000-01	2001-02
Formulations	44.0	40.4	16.0	16.0
Life saving bulk drugs andformulations	0.0	0.0	0.0	0.0
Bulk drugs	44.0	40.4	16.0	16.0
Drug intermediates	44.0	40.4	16.0	16.0

Source: CRIS INFAC

• Demand for bulk drugs and formulations is expected to increase, due to an increase in domestic and export demand. Domestic demand for bulk drugs is expected to increase marginally.
• In the domestic formulation market, prices are expected to be under pressure due to increased price competition from generic players.
• During the April-December 2000 period, sales and net profits of 19 pharmaceuticals companies increased by 9.7 per cent and 36.4 per cent respectively, as compared with those during the corresponding period in 1999.

Pharmaceuticals: Budget impact

Impact factors

Company name	Impact	Impact factors
Ranbaxy Laboratories	Pos	B, C, D
(670.85, 689.75)
Dr. Reddy Ltd.	Pos	B, C, D
(1,329.30, 1,322.80)
Cipla	Pos	B, C, D
(1,017.10, 1,014.15)
Nicholas Piramal	Pos	B, C, D
(351.05, 349.60)
Cadila Healthcate	Pos	B, C, D
(151.25, 150.40)
Glaxo Ltd.	Pos	C, D
(453.85, 462.10)
Hoechst Marrion Rousell	Pos	C, D
(494.80, 491.00)
Pfizer	Pos	B, C, D
(612.30, 606.00)

Note:
Figures in brackets indicate the closing share prices, on February 27, 2001 and February 28, 2001, respectively.
pos= positive

Source: CRIS INFAC

A: The reduction in the customs duty on formulations is expected to have no impact on domestic formulators, due to the significant price difference between domestic formulations and on-patent formulations in the international market.

B: The weighted deduction benefit given to R&D expenditure is also extended to expenditure incurred on biotechnology research, clinical trials and regulatory approval. This is expected to benefit Indian pharmaceutical companies.

C: The new drug policy is expected to relax the pricing control on formulations. This is expected to have a positive impact on domestic and multi national pharmaceutical companies.

D: The reduction of surcharge on corporate tax, from 13 per cent to 2 per cent and the expected decline in interest rates, is expected to have a positive impact on producers.:

Rediff-CRISIL Budget Impact Analysis
Budget 2001

Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.

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