Mumbai, March 3 (PTI): Drugs are expected to cost more following an increase in excise duty to 6 per cent from 5 per cent on formulations and to 12 per cent from 10 per cent on bulk drugs in the budget, ratings agency Crisil has said.
“These increases are not expected to significantly impact pharmaceutical players as they will pass on the duty increases to consumers,” Crisil said in its budget analysis.
The concessional 5 per cent basic customs duty has been extended to six life-saving drugs/vaccines and to bulk drugs used to manufacture these drugs.
However, the impact of this on the industry will be neutral since these drugs account for a small proportion in the domestic market.
The five-year extension of the 200 per cent weighted deduction for in-house R&D expenditure will marginally benefit firms as R&D expenditure, on an average, forms less than 5 per cent of their net sales, Crisil said.
According to the ratings firm, the phama industry is on a strong footing and the healthy growth will continue. In 2013-14, Crisil Research expects the industry to continue to expand at a healthy rate of 13-14 per cent year-on-year, reaching $36-37 billion.
The industry is estimated to grow a robust 16-17 per cent year-on-year (constant exchange rate) to $33-34 billion in 2012-13.
Exports (both bulk drugs and formulations) are estimated to grow about 17 per cent year-on-year during the year, driven primarily by formulation exports to regulated markets, especially the US.