Patients to benefit from GST rate cut, but firms likely to face pressure

GST rationalisation lowers costs for medical consumables and high-end therapies, benefiting patients. However, pharma companies, particularly in biologics, may face margin pressure due to ITC loss

The rationalisation of goods and services tax (GST), announced on Wednesday, directly lowers the cost of everyday medical consumables, and also high-end therapies in oncology and rare diseases, helping reduce out-of-pocket patient expenditure and better adherence to medication. The move, however, may lead to domestic formulation makers, especially in biologics, losing input tax credit (ITC) on high-tax inputs, thereby creating margin pressure.

 

Most medicines, medical devices, consumables, and diagnostics that previously attracted 12 per cent GST have now been brought under the 5 per cent slab. A targeted set of high-cost and rare-disease drugs, covering