Increased excise duty, MAT on SEZs to hurt pharma industry

Leading drug makers today said that higher excise duty proposed in the Budget 2011-12 would make medicines costlier and hurt the common man. Further, pharmaceutical industry players also feared that imposition of Minimum Alternate Tax (MAT) on Special Economic Zones would adversely impact their profits, since most export units of drug firms are located in various SEZs.

“Healthcare has not received the priority it deserves. The one per cent increase in excise duty will increase the cost of medicines to the consumer by about 1.5 per cent,” Pfizer MD Kewal Handa told PTI.

The excise duty on medicines and medical equipment has been increased from four to five per cent.

Handa noted that the government could have done away with customs and excise duties on medicines, which could have helped in taming high inflation.

“It could have benefited the common man, who has to spend for healthcare from his or her pocket,” he added.

Dr Reddy”s Laboratories termed levy of MAT on special economic zone as “negative” for the industry.

“…the levy of MAT on SEZ units is negative for the Industry at large. There have been no major provisions for the pharma sector and the budget in general is a neutral one for us,” Dr Reddy”s Laboratories CFO Umang Vohra said.

Lupin President, Finance and Planning S Ramesh said the Budget has little for the pharma industry and the MAT introduction on SEZs and the phasing out of EOUs would hurt the competitiveness of the sector in global markets.

He added: “The Budget, simply put, is long on intent but short on content  while the strategic focus of the Budget on various matters such as fiscal consolidation is explicit, the process by which it will translate into a tangible outcome is still to be made unequivocal.”

Commenting on the Budget, Glenmark Pharmaceuticals CEO & MD Glenn Saldanha today said that the Union Budget had nothing for the pharma industry.

“There is as expected nothing for the pharma industry, expect an increase in excise duty from 4 per cent to 5 per cent,” he added.

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