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Pharmaceuticals
We expect the difference between excise duty on formulations and
APIs to come down. This would be marginally positive, as excise
duty is generally passed on. Continuation of the 200% weighted
deduction on R&D spend would be positive for the sector. The
hospital industry may benefit if infrastructure status is provided.
Fig 18 – Budget expectations and possible impact on companies
Expected Measures Impact Company
Difference between excise duty on APIs (~10%)
and formulations (~4%) to come down
Neutral Cipla, Sun, Ipca, Aurobindo
200% weighted deduction to continue on R&D expenditure Positive Sun, Dr Reddy’s, Glenmark, Lupin, etc
Infrastructure status for hospital industry Positive Apollo Hospitals and Fortis Healthcare
Source: Anand Rathi Research
Expectations
The difference between excise duty on APIs and formulations may be
reduced by lowering duty on APIs.
The current benefit of 200% weighted deduction on R&D expenditure
is expected to continue.
The long-awaited proposal to provide infrastructure status to the
hospital sector may be approved.
Impact on the sector
We believe that the effort to bring parity between excise duty on APIs
and formulations would help vertically integrated companies.
However, the impact of excise duty is generally passed on.
Continuation of 200% weighted deduction on R&D expenditure
would benefit R&D-focussed companies as R&D costs constitute
more than 5% of revenue for the industry.
Infrastructure status for the hospital sector would provide it with tax
benefits and encourage growth where the gestation period is high.
Companies affected
Sun Pharma, Dr Reddy’s, Lupin, Ipca, Biocon, Glenmark, etc., would
benefit from continuation of the 200% weighted deduction on R&D
expenditure. However, they are already benefiting. Apollo Hospitals and
Fortis Healthcare would get tax benefits if infrastructure status is provided.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Pharmaceuticals
We expect the difference between excise duty on formulations and
APIs to come down. This would be marginally positive, as excise
duty is generally passed on. Continuation of the 200% weighted
deduction on R&D spend would be positive for the sector. The
hospital industry may benefit if infrastructure status is provided.
Fig 18 – Budget expectations and possible impact on companies
Expected Measures Impact Company
Difference between excise duty on APIs (~10%)
and formulations (~4%) to come down
Neutral Cipla, Sun, Ipca, Aurobindo
200% weighted deduction to continue on R&D expenditure Positive Sun, Dr Reddy’s, Glenmark, Lupin, etc
Infrastructure status for hospital industry Positive Apollo Hospitals and Fortis Healthcare
Source: Anand Rathi Research
Expectations
The difference between excise duty on APIs and formulations may be
reduced by lowering duty on APIs.
The current benefit of 200% weighted deduction on R&D expenditure
is expected to continue.
The long-awaited proposal to provide infrastructure status to the
hospital sector may be approved.
Impact on the sector
We believe that the effort to bring parity between excise duty on APIs
and formulations would help vertically integrated companies.
However, the impact of excise duty is generally passed on.
Continuation of 200% weighted deduction on R&D expenditure
would benefit R&D-focussed companies as R&D costs constitute
more than 5% of revenue for the industry.
Infrastructure status for the hospital sector would provide it with tax
benefits and encourage growth where the gestation period is high.
Companies affected
Sun Pharma, Dr Reddy’s, Lupin, Ipca, Biocon, Glenmark, etc., would
benefit from continuation of the 200% weighted deduction on R&D
expenditure. However, they are already benefiting. Apollo Hospitals and
Fortis Healthcare would get tax benefits if infrastructure status is provided.
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