IMPACT OF BUDGET 2017 – 18 on PHARMA SECTOR

by Twinkle Garg

Expectation from Budget –

  • Phasing out of weighted deductions
  • Incentives for patents
  • Exemptions of certain duties and taxes
  • Boost to SME

What the Budget has to offer?

  • Action plan prepared to eradicate following non-communicable disease (NCD) –
  • Kala Azar by 2017
  • Filariasis by 2017
  • Leprosy by 2018
  • Measles by 2020
  • Tuberculosis (TB) by 2025
  • Proposal to set two new AIIMS (All India Institutes of Medical Sciences) hospitals in Jharkhand and Gujrat.
  • Government proposes to amend the Drug and Cosmetic Rules to ensure availability of drugs at the reasonable price and to promote the use of generic medicines.
  • Government shows commitment to transform 1.5 lakh health sub-centres to health and wellness centers.
  • New rules for regulating medical devices will be internationally harmonized to attract investments. This will reduce the cost of such devices.
  • New 5000 postgraduate medical seats to be added by Government to increase the number of specialty doctors.
  • Finance assistance in the form of direct transfer of Rs.6000 to bank accounts of pregnant women who undergo institutional delivery and vaccinate the new born.

Pharmaceutical companies which provide medicines for non-communicable disease are :

Tuberculosis Lupin India Ltd, Glaxo SmithKline Ltd
Filariasis Merck & Co
Leprosy Cipla Ltd

Measles

Taj Pharmaceuticals Ltd., RANBAXY Laboratories Ltd  


Market Reaction:

Budget 2017 receives mixed reaction from pharma sector

Stocks Price as on 31st Jan, 2017 Price as on 1st Feb, 2017 Percentage change
Aurobindo Pharma Ltd. 682.3 666.65 -2.3 %
Torrent Pharma 1299.95 1298.3 -0.1%
Nacto Pharma Ltd. 690.9 671.55 -2.8 %
Hester Bio 760.8 771 +1.3 %
Sun Pharma 636.55 624.85 -1.8 %
Lupin 1474.25 1472.15 -0.1 %
Glenmark 893.40 899.10 +0.6 %
Pfizer 1770 1794.95 +1.4 %


Conclusion:

In an uncertain global market, it was expected that more incentives would be given to meet the imminent challenges directly affecting the key industry. Expectations were based on the Government’s vision of making India one of the top three pharmaceutical markets by 2020.  However, Government’s impetus to reduce the borrowing cost and to increase access to credit will help the industry to grow.

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