GST rate rejig set to boost access and growth in Indian pharma sector

New Delhi- The recent restructuring of Goods and Services Tax (GST) is expected to make life-saving drugs and healthcare more affordable and accessible, while also driving growth in India’s pharmaceutical market, according to a report.

In August, the pharma sector registered 8.7 per cent value growth, with analysts noting that the industry is poised for broader transformation in pricing, access, and patient volumes.

“The GST Council’s tax rate restructuring in the pharma sector is transformative for accessible healthcare,” said Suresh Nair, Tax Partner at EY India.

“By lowering GST on all medicines from 12 per cent to 5 per cent and granting nil rates to 36 vital life-saving drugs, patient expenses will drop significantly, improving access to critical therapies,” he added.

At its 56th meeting earlier this month, the GST Council rationalised the indirect tax structure, reducing four slabs to two — scrapping the 12 per cent and 28 per cent rates, while retaining the 5 per cent and 18 per cent slabs.

Under the new structure, life-saving drugs, health products, and some medical devices will see their rates cut from 12 per cent/18 per cent to 5 per cent or nil. Importantly, GST on 33 cancer medicines and rare disease drugs has been slashed from 12 per cent to zero.

This move is expected to ease patients’ financial burden and spur demand for high-value therapies, particularly in oncology and rare diseases. Treatments such as Roche’s Atezolizumab (Tecentriq), Obinutuzumab (Gazyva), Entrectinib (Rozlytrek), Risdiplam (Evrysdi), and Emicizumab (Hemlibra) are now expected to become more affordable with nil GST.

Similarly, oncology and rare disease therapies from companies like Sanofi, Novartis, Johnson & Johnson, Takeda, GSK, Amgen, Bayer, and Boehringer Ingelheim will also become cheaper, improving patient access, the report highlighted.

The revised GST rates on services will take effect from September 22. Industry players are likely to recalibrate pricing, expand access programmes, and explore new markets — especially in tier-2 and tier-3 cities.

With inputs from IANS