Drug-makers expect shortage of medicines in shift to GST

Pharma companies see a slight disruption in drug sales as many stockists and retail chains do not have a GST number in place as yet even as inventories at drug stores have come down drastically as they prepare for a shift to the new tax regime.

There has been a reduction in inventories since May-end, as distributors and retailers tried to minimise losses due to change in tax structure, sources said.

The All India Organisation of Chemists and Druggists, which represents over 8 lakh chemists, however, has assured the government that supply of drugs will remain uninterrupted.

According to the pharmaceutical industry, more than 20,000 traders across the country are yet to get systems in place to handle the 1 July roll-out pf GST, which could cause a temporary shortage of medicines.

"Many stockists and retail chains, especially those in small and rural regions, do not even have a GST number in place. We are anticipating some shortages and problems at least for first few months before things settle down," a senior industry executive with a leading pharma company said.

Both pharma companies and retailers maintain that they are trying to coordinate as much as possible to avoid any disruptions in supply.

They say that retailers have been encouraging customers to buy essential medicines such as those for treatment of diabetes, gastrointestinal diseases and cardiac ailments to avoid shortage.

Under the GST regime, most medicines will be taxed at 12 per cent, while essential drugs, including insulin, will be taxed at 5 per cent.

The National Pharmaceutical Pricing Authority (NPPA) has issued a revised price list for medicines which are under price control.