GST hiccups stay for distributors, chemists

One month after the roll out of the goods and services tax (GST), the stocking of medicines has not stabilised.

Chemists in Delhi said they were not comfortable packing their shelves because incentives provided to them in the pre-GST regime were no longer on offer.

“Most companies are not compensating for the losses made by distributors in their closing inventory. In turn, distributors are pushing the burden on the retailer,” said a chemist in east Delhi.

Chemists added the shortage was mostly in drugs of common use.

The All-India Organisation of Chemists and Druggists (AIOCD) said stockists were maintaining a lean inventory of three weeks and recovering the loss on the June inventory would take two to three months. The average inventory days have risen from 17 days in June to 22 days in July.

Chemists and distributors are stocking anti-diabetes drugs the least followed by gastrointestinal drugs and vaccines, according to the AIOCD.  Stocks of anti-diabetic drugs are for 17 days, gastrointestinal drugs 19 days and vaccines for 20 days.

“Sun Pharmaceuticals has initiated the process of compensating distributors. But Ajanta Pharma has not kept its promise,” said Joydeep Sarkar, secretary of the All-India Chemists and Distributors Federation (AICDF).

Sun Pharmaceuticals had said it would provide a 5 per cent reimbursement on distributors’ closing stocks as of June 30 based on declarations made in the GST return form.

The AIOCD said Ajanta Pharma was among the companies with the lowest inventory levels, at 16 days for the week ending July 28. The lowest inventory level is for drugs supplied by Boehringer Ingelheim at 14 days. Dabur has the highest inventory level at 43 days. 

Sarkar said there was confusion on whether they would get back the GST element on expired products.

“Now that the tax element has gone up by 7 per cent, we would like to be reimbursed when we return expired products. The AIOCD and AICDF have sent representations to the GST Council on the issue,” he added.