Impacts of GST on Pharmaceutical Industry

An increase of $70 billion was noted in the Indian healthcare industry since 2012, the Indian Healthcare and Pharmaceutical Industry is likely to touch $150 billion by the end of 2017. The Goods and Service Tax (GST) certainly is the most prominent indirect tax reform measure taken by the Indian Government since the Independence. The GST regulation is going to be a game changer for many, including Indian Pharmaceutical Industry. The process is also going to simplify the process of tax paying and in general the taxation system. Lessening the cost of production and distribution will benefit the buyers.

Healthcare and pharmaceutical Industry is one of the leading contributors among all, with respect to income and occupation. GST will include many taxes to make it cost effective and will make it simple for all. Critics say that the GST will have a positive impact on the Indian industry and specifically on Pharmaceuticals. Suneeta Reddy of Apollo Hospitals Group, considers the GST as a bold step by Indian government towards the universal health coverage with the comfort of doing business in the country with one country, one tax and make an equivalent level playing field for the pharma companies in the country. GST will also inspire the local industrialized sector to step into producing products that will be more inexpensive for the local users.

Execution of GST will outcome in an efficient supply chain. Interstate contracts between two businessmen will become tax neutral, substituting outdated C&F distribution model. Most of the companies will have to settle their current supply models by minimizing the need for multiple states and increasing the effort on regional hubs. This will not only make the process spare and lighten the difficulties involved but will also decrease the SCM cost considerably.

Many pharmaceutical companies presently work on the traders-of-goods model in which a few services they gain becomes a cost for them with service tax association involved. But with a continuous credit appliance to be familiarized by GST the service tax waged by the companies will come back to the companies as a repayment and in that way saving the cost.

GST is also heading towards helping the Medical Tourism Industry in an indirect way. It has previously enjoyed a modest benefit over other first world nations with income of over $2 billion currently. With GST the Medical Tourism industry will rise by miscellaneous. The cost of medicines and insurance, services and international travel will decrease resulting in better scenarios to attract medical tourists more to the country.

Many critics may also have pointed out the negative impacts of GST, that would be at the prices of some medicines that are taxed presently at the rate of 5% but may interest a tax of 12% post-GST. The same consequence can be noticed on the Active Pharmaceutical ingredients or raw materials that will have the impact on the cost. The prices of the life-saving drugs and health-care services after GST becomes another matter of concern. Robosol is GST ready, updating and implementing the GST ready version of Microsoft Dynamics NAV.