Indian drug-makers are heavily dependent on China for Active Pharmaceutical Ingredients
The annual budget for the fiscal 2018-19 should have provisions to encourage the production of basic raw materials for the pharmaceutical sector to reduce dependence on China, industry body Indian Drug Manufacturers Association (IDMA) said in a representation to the Union government. It also suggested that the share of healthcare spend be increased from 2% to 3% of the total budget.
Indian drug-makers are heavily dependent on China for Active Pharmaceutical Ingredients (API). Recently, environmental concerns in China resulted in a drop in production of API and subsequent export to India, shooting up prices or raw materials and therefore input costs. Players are now wary of their over reliance on China and have suggested that new investment in manufacturing of APIs be incentivised. "We request setting a special capital linked subsidy scheme to MSME who invest in API industry to help India reduce her dependence on China, in our national interest," said a note from IDMA.
It also said that, the current spend on healthcare is less than 2%, which is short of the international average for developing countries at over 3%. It is requested that spend on healthcare should go up to 3% of the GDP. Gujarat is one of the key hubs for production of medicines. Till 2004, it had a share of 42 per cent in the country's pharmaceutical production. Tax exemptions in certain states led to migration of units dropping the share to about 30 per cent. However, roll out of GST has created a level playing field and the share has now grown marginally to 32%.
Other suggestions include exempting the medicine samples given to the Doctors from Goods and Services Tax (GST), as its cost is already accounting in the manufacturing cost of the batch. "Physician samples are important form of confidence building and promotions for medicines. They help the Doctors build confidence on quality and efficacy for a particular product," argues IDMA.
It also suggested to expedite GST refunds to exporters. The process has got completely derailed because of the mismatch in the data of GST and custom portal.
SECTOR SNAPSHOT
- Pharmaceutical production in India: Rs2.25 lakh crore
- Pharma exports from India : Rs1.15 lakh crore
- Gujarat’s share in national production: about 32%
- Pharma licenses in India: 20,000
- Pharma licenses in Gujarat: 4,000
- Sector CAGR for 3 years: 10% (1.5 times of GDP)
- Employment in Gujarat: one lakh
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