Stockists stare at shortage as pharma industry gears up for GST

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Most companies are minimising the stocking at the distributor level before the roll-out of GST

Latest news : The pharmaceutical industry expects supply shortages as it gears up for transition into the goods and services tax (GST) regime from July 1. Inventories lying with stockists at the end of May were lower than the levels the previous month, with most companies minimising stocks lying with distributors, ahead of GST implementation.

According to the data from the market research wing of All India Organisation of Chemists and Druggists (AIOCD), the AIOCD-AWACS, May saw a marginal reduction in Day 1 inventory being carried by distributors. For the overall Indian Pharmaceutical Market (IPM) there is a reduction of 1.3 days in inventory. AIOCD represents over 500,000 medicines sellers across India.

Analysts claim that apart from the stockist inventory, the in-transit stocks too have fallen. Basically, the stockists do want to be saddled up with old stock.

There is some apprehension amongst stockists that in the new regime, drugs would attract a 12 per cent GST compared to about 9 per cent tax on the maximum retail price (MRP) now. The current tax includes excise and value added tax (VAT) paid by the manufacturer. Daara Patel, the secretary general of the Indian Drug Manufacturers Association (IDMA), said that from July 1 the price of the drug would include GST instead of excise.(read more)

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