High taxes pushing drug firms out of MP

The city-based pharma companies have been moving out of the state for newer pastures in Himachal Pradesh and Uttaranchal, where they get tax benefits.

Subhash Gulati, president of Indore Chemists Association, said almost all the big pharma companies of Madhya Pradesh have either shifted to Himachal Pradesh and Uttaranchal or started focusing on manufacturing of life-saving medicines, which are tax-free on exports.

He said at present with 16 per cent excise duty on manufacturing of medicines, 9 per cent MP state tax and 4.20 per cent Central sales tax add up to a total of 13.20 per cent tax on sale of medicines.

As a result, most small and medium drug-manufacturing units, with turnover between Rs 50 lakh and Rs 2 crore, have shut down. Only the financially stronger ones are surviving by exporting medicines, said Gulati.

"Companies like Ranbaxy, Nicholas Piramal and Plethico Pharmaceuticals have been concentrating on manufacturing medicines for exports purpose only," he said.

Indore is the largest pharma market in Madhya Pradesh and the Dawa bazaar is the largest pharma market in the city, where more than 3,000 druggists, chemists, stockists, super stockists and C&F agents have been running their businesses.

This is the bazar that not only supplies medicines to Maharashtra, Gujarat, Uttar Pradesh, south Indian states but also export many medicines made here to African countries and Bangladesh.

Gulati pointed out that the daily sales of medicines have come down to the tune of Rs 2-3 crore, becoming a half, owing to heavy taxation.

"There are 46 associations under the MP Chemists' Association, and we have urged both the state and the central governments to reduce taxes, but we haven't received anything more than only assurance," said Gulati.

While complaining against the working system of Food and Drug Administration (FDA), he said no fake medicines are manufactured in MP. He flayed FDA, saying it is responsible for issuing licences to local companies manufacturing medicines like 'Vikas' bearing high resemblance to names like Vicks of Procter and Gamble Hygiene Healthcare.

There are some other such medicines with similar resemblance. Gulati thought the health ministry should consult with drug manufacturers across the county from time to time, to egg them on to give their best output.

However, with the implementation of the new drug policy from April 1, the pharma industry in the city can expect a fresh lease of life.