MNC pharma firms eyeing duty relief

Eli Lilly and Co (India), Sanofi Aventis and Bristol Myers Squibb India Pvt are among the multinational pharmaceutical companies that are trying to get their products included in the duty exempted list of medicines that is likely to figure in Union Budget 2007-08. It is learnt that the companies have approached the chemical ministry seeking duty exemption on some of their products.

The chemical ministry will consider the merit of each request for incorporating in its formal pre-budget representation to the finance ministry, official sources said.

According to them, at least a dozen of products may find specific mention in the chemical ministry's recommendation.

While company officials are not willing to share the information on the specific requests they have made, pharmaceutical industry associations said, their pre-budget representation have not talked about individual drugs.

"We have requested for reducing the tax burden on drugs at least by half. However, we have not taken up the case of individual members," an Organisation of Pharmaceutical Producers of India functionary informed Business Standard.

The companies' interest in seeing their products in the tax exempted list is 25-30 per cent, reduction to it brings the maximum retail price of the medicine.

With the landed cost of most of these drugs being prohibitively high, they find duty exemption as the best option to reduce the Maximum Retail Price.

Interestingly, many of these products are anti-cancer or anti-AIDS medicines, the segments for which chemical ministry has been pitching for across-the-board duty exemption.

For instance, Eli Lilly is known to have requested custom duty exemption for anti-cancer drug Pemetrexed powder combination.

Sanofi Aventis wants its anti-cancer drug Docetazel to be part of the duty exempted list. Fulford (India) is another company that is trying for duty exemption for its anti-cancer drug Temozolomide, a medicine used in the treatment of brain tumor.

Johnson & Johnson is keen to see custom duty exemption on its Transdermal Fentanyl patches as it is used in the treatment of chronic cancer pain and other chronic pain. On the anti-AIDS front, Emcure Pharmaceuticals has requested for exemption of excise duty on Atazanavir, an anti-HIV drug.

Meanwhile, the finance ministry is considering a chemical ministry proposal for customs and excise duty exemption to all anti-cancer and anti-AIDS drugs.

This is the second consecutive year the chemical ministry, the administrative ministry for drugs and pharmaceuticals, is pitching for complete duty exemption for these two categories of medicines.

The Budget 2006-07 had not considered most of its proposals and the reduction of customs duty to 5 per cent is limited to 10 anti-AIDS and 14 anti-cancer drugs.

An acceptance of the chemical ministry recommendation would have brought over 100 anti-AIDS and anti-cancer medicines in the duty exempted list.

The attempts of individual pharmaceutical companies is to see that their drug remains in the duty exempt list, even if the finance ministry prunes the final list.