Mumbai:

A majority (50-70%) of chemists and stockists across the country are not clear about GST aspects, and are yet to initiate implementation processes in their businesses, indicating possible drug shortages in certain therapies. Supplies of certain medicines may get disrupted, particularly of high-value ones like oncology therapies, and those which have been launched recently, as chemists will maintain restricted inventory, but essential medicines will not be affected, Arijit Choudhary director - global accounts, QuintilesIMS told TOI.

Recently, pharma research firm, AIOCD Awacs which tracks seven lakh chemists, also said it did not foresee shortages at the consumer level. The on-ground readiness of distributors and chemists to implement GST by July 1 unfortunately remains below par, a survey conducted by information and technology-enabled healthcare service provider, Quintiles IMS says, adding, managing short-term disruption due to new tax regime will be challenging.

Significant number of distributors and stockists are yet to register themselves on the GST portal, the survey involving 200 chemists and 25 distributors across key cities in India showed. TOI had first reported on May 4 about GST sparking drug shortage fears due to attempts by stockists and trade channels to reduce inventory.

Says Amit Mookim, general manager (South Asia), QuintilesIMS, "The overall increase in tax burden will get offset by the improved efficiencies; and pharma companies are likely to absorb the additional tax burden (an estimated net increase of about 1.8% on finished formulations). While the long-term outlook remains positive, managing short-term disruption will be critical. Based on our survey, the on-ground readiness of distributors and chemists to implement GST by July 1 unfortunately remains below par; pharma companies will need to leverage cross functional participation within the organisation to ensure effective implementation."

There is lack of clarity in trade around the accounting of inventory left on June 30, and how the input tax credit process will work, and claims be processed. The trade channels are not clear about expired goods, where refund (on tax) is permitted only up to six months, while average pharma product shelf life is 12 months.

Earlier, pharma companies had assured distributors and stockists (wholesalers) that they would be compensated and reimbursed the tax difference, due to GST kicking in.

At the retail level, chemists are not confident that about getting tax refund in time and hence are maintaining a low stock. Chemists are apprehensive that the same challenge they faced when the new pharma policy was implemented in 2013, of delays in claiming tax refunds, will emerge this time around too, an industry expert said.

 21 Jun 2017, 11:52 AM