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Pharma firms yet to begin billing under new GST rates

LiveMint logoLiveMint 03-07-2017 Isha Trivedi

Mumbai: As the goods and services tax (GST) kicked in on 1 July, pharmaceutical companies spent the first two days migrating data to the new system, and updating HSN (harmonized system nomenclature) codes for products.

Most pharma companies are likely to begin billing of products under GST rate from Monday or later during the week, industry officials said.

At the retail level, no major shortage of medicines was reported despite a significant reduction in inventories in June—a relief for consumers.

According to the All India Organisation of Chemists and Druggists (AIOCD), distributors had an average 17 days inventory as on 28 June, much lower than 40 days at the end of May, but sufficient to meet demand.

“From a consumer view-point, apart from 17 days of stockist inventory, there is two weeks of retail inventory—so, the possibility of drug shortages are nil and all brands of medicine are available in adequate quantities for consumption,” market research firm AIOCD-AWACS said in its report dated 30 June.

Chemist shops continued to sell existing stocks at the maximum retail price (MRP) fixed before the GST rollout as they are yet to get new supply and revised price list from companies.

The mom-and-pop chemist shops were largely issuing bills without the GST number, even when many of them had registered themselves on the network.

“We are registered on GST network but have not started invoicing yet. We still have old MRP stocks and there is some confusion how we bill it now that GST has come into effect,” said the owner of a pharmacy shop in Kandivali, Mumbai.

So, basically, for consumers, their medicine bills would look the same unless they are buying from chain stores such as Apollo Pharmacy.

“We have made the required changes in the invoices and we mention GST rate separately in the bills. We will sell the stocks at old MRP and keep updating it as and when we get new price lists from companies,” said P. Jayakumar, chief operating officer of Apollo Pharmacy.

Most stockists have registered on the GST network and have their information-technology systems in place. With the government extending the deadline for registration, the rest will do so in the coming days, said Ameesh Masurekar, director at AIOCD-AWACS.

He added that the key factor to monitor in the coming days will be primary sales of companies to distributors, which will give an indication of how well equipped the supply chain is to handle GST regime.

Distributors are working hard to become GST-compliant and are awaiting clarity from several companies regarding price at which a product is to be sold to retailer, a Mumbai-based stockist said.

Meanwhile, the chief financial officer of a Mumbai-based pharma company, requesting anonymity, said retailers, stockists, and carrying and forwarding agents in all states are not fully ready for GST and, hence, getting input credit would be difficult.

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