Domestic pharma companies defend lifting of customs duty exemption on life-saving drugs

Indian companies claim they are already producing these 15 drugs domestically

Even as the government has imposed a customs duty of 35 per cent on 15 life-saving drugs, it is unlikely to affect patients as these drugs are also manufactured by domestic generic drug makers and sold at similar prices, claim Indian pharma companies . Moreover, six of 15 drugs in the list already fall under the government's price control order.

"Indian drug companies are perfectly capable of manufacturing these drugs for our domestic market. In fact, many of the companies are already doing it and exporting it to countries like the US as there is no excise duty. Therefore, the patients will not be affected as retail price increase for any drug is highly unlikely. If there is an increase, it would be marginal," said M S Mani, senior director at Deloitte in India.

For example, Trastuzumab - a blockbuster drug used for treating breast cancer - is available through Swiss-based Roche (brand name Herclon) and through Pune-based Emcure (brand name Biceltis). Both the companies are selling this drug at a similar maximum retail price (MRP) of Rs 75,000 an injection. Similarly, anti-cancer drug Rituximab is available through Roche and Hyderabad-based Dr. Reddy's Laboratories, at a similar MRP of Rs 37,500 an injection. According to pharmacists, there are many other Indian drug makers, which are producing these two drugs.

"Among these 15 drugs, it is only Rivastigmine for which there is no Indian generic available. Apart from that, every drug in the list has generic version which is being produced by an Indian drugmaker," said Devinder Sharma, deputy general manager, central buying unit, Paras Healthcare.

Rivastigmine is a drug used in the treatment of mild to moderate dementia caused by Alzheimer or Parkinson's disease. According to Sharma, Novartis is the only company that is providing this drug in the form of patches (at MRP of Rs 142 a patch) under the brand name Exelon.

AFTER-EFFECTS OF A DUTY HIKE

• Indian companies are already producing these 15 drugs domestically
• However, it is more viable for them to export the same drugs than sell domestically
• The govt tries to strenghthen the taxation structure to increase domestic production
• Anti Rabies and Anti-D Immunoglobulin, Imatinib, Procarbazine, Ritonavir and Saquinavir  are already under the govt's price control
• Domestic bulk drug industry, which was facing a massive downturn due to Chinese imports, gets some relief

"It becomes unviable for Indian companies to sell the same drugs in India because of various local taxes. India has manufacturers, however, as there was no customs duty, it was cheaper to import the same drugs. It is always easy to have a trading model than a manufacturing model. Most of the companies by nature prefer a trading model," added Mani.

The government has also imposed a 35 per cent import duty on anti-haeomophilic factor (VIII and IX). This drug is used to treat haemophilia - a group of hereditary genetic disorders that impairs the body's ability to control blood clotting. Even as some experts predict a major price hike for this drug, Sharma said there were many Indian drugmakers - like Reliance - who could manufacture generic anti-haeomophilic factor at competitive prices. "The same shall help in availability, stocking and costing as the same shall be a national produce," he added.

Six drugs on the list - Procarbazine, which is used to treat certain types of brain cancer - and Ritonavir, an antiretroviral medicine used with other drugs to treat HIV/AIDS - are already under the government's drug pricing control through its 2013 order.

To boost domestic production, the government has also increased the customs duty on 61 bulk drugs to 10 per cent from five per cent. Bulk drugs, also called active pharmaceutical ingredients, are used for making the final medical formulations (drugs for consumption). The National Democratic Alliance government had earlier expressed its apprehension as India imports around 80 per cent of its bulk drugs from China.

As a result, the domestic bulk drug manufacturers have been facing a tough time. Many of the Indian bulk drug manufacturers including Orchid Chemicals, Parabolic Drugs, Ind Swift Labs, and Surya Pharma are at various stages of corporate debt restructuring plans.