Indian Excise Duty Reforms to Favour Larger Local Drugmakers

According to local reports, India's new excise duty regime is widely expected to favour the country's larger local drugmakers, while imposing significant challenges on smaller producers. Much of the changes are expected to redirect multinational companies' production outsourcing to drugmakers able to manufacture in larger quantities.

As many small Indian contract drugmakers rely on a single client, tariffs based on retail rather than wholesale prices will benefit producers who are able to obtain economies of scale. Further, the regulations are likely to benefit drug producers operating in states exempted from the new tariff structure. Leading manufacturers Cadila Healthcare, Cipla, Sun Pharma and Unichem are all reported to have manufacturing operations in the tariff-free states of Himachal, Uttranchal and Jummu and Kashmir.