Pharma sales may rise after GST cuts, but margin pressure could challenge companies
The 36 lifesaving drugs now enjoying zero GST primarily target rare diseases, genetic disorders, cancers, and other critical conditions. In addition, several essential medicines and components, including respiratory therapies and combination oncology drugs, have seen their GST reduced from 12 per cent to 5 per cent. Together, these measures make high-cost, specialised treatments more affordable and accessible.
- Sep 23, 2025,
- Updated Sep 23, 2025 8:23 PM IST
From Monday, GST cuts on lifesaving medicines have made several treatments more affordable—a move expected to drive higher sales volumes for pharmaceutical companies.
The 36 lifesaving drugs now enjoying zero GST primarily target rare diseases, genetic disorders, cancers, and other critical conditions. This list includes enzyme replacement and gene therapies for metabolic and inherited disorders, haemophilia and coagulation treatments, advanced cancer therapies such as targeted drugs and immunotherapies, rare neuromuscular disorder medications, and monoclonal antibodies for cardiovascular and cholesterol management.
In addition, several essential medicines and components, including respiratory therapies and combination oncology drugs, have seen their GST reduced from 12 per cent to 5 per cent. Together, these measures make high-cost, specialised treatments more affordable and accessible—particularly for patients with complex or chronic health needs—while also potentially expanding the market reach of companies producing these critical therapies.
Analysts say this could create an opportunity for companies such as Biocon, Sun Pharma, Cipla, Roche, and Novartis to expand their market presence. Salil Kallianpur, a pharma analyst, said the GST cuts reduce the maximum retail price (MRP) of medicines, but the real impact will depend on how much of the benefit companies pass on. “Pharma companies decide MRPs. They may lower prices fully, partially, or not at all, depending on competition and margins,” he said.
With the National Pharmaceutical Pricing Authority (NPPA) pushing for compliance, industry watchers expect more competitive pricing in the coming months. Lower GST also reduces working capital tied up across the supply chain, which could encourage smaller distributors and chemists, particularly in semi-urban and rural areas, to stock a wider range of medicines. Public hospitals and state procurement agencies may stretch their budgets further, potentially improving drug availability. These changes could expand the market reach of firms with strong portfolios in oncology, rare diseases, and critical therapies.
However, Kallianpur cautioned that GST relief has not been extended to key starting materials (KSMs) and active pharmaceutical ingredients (APIs), meaning manufacturers may face margin pressure. “While Indian companies may see higher demand, input costs remain unchanged, and cheaper imports from China could intensify competition,” he noted.
Industry experts such as Saransh Chaudhary, President, Global Critical Care, Venus Remedies, highlighted that the GST revisions are a positive step for affordability, especially in Tier II and III cities. “The government has addressed a pressing barrier to treatment costs. What will matter now is ensuring that lower taxes translate into tangible access for patients across the healthcare system,” he said.
Suresh Nair, tax partner at EY India, said the citizen-focused reforms promote equitable healthcare, strengthen public health, and reinforce India’s global pharmaceutical leadership.
From Monday, GST cuts on lifesaving medicines have made several treatments more affordable—a move expected to drive higher sales volumes for pharmaceutical companies.
The 36 lifesaving drugs now enjoying zero GST primarily target rare diseases, genetic disorders, cancers, and other critical conditions. This list includes enzyme replacement and gene therapies for metabolic and inherited disorders, haemophilia and coagulation treatments, advanced cancer therapies such as targeted drugs and immunotherapies, rare neuromuscular disorder medications, and monoclonal antibodies for cardiovascular and cholesterol management.
In addition, several essential medicines and components, including respiratory therapies and combination oncology drugs, have seen their GST reduced from 12 per cent to 5 per cent. Together, these measures make high-cost, specialised treatments more affordable and accessible—particularly for patients with complex or chronic health needs—while also potentially expanding the market reach of companies producing these critical therapies.
Analysts say this could create an opportunity for companies such as Biocon, Sun Pharma, Cipla, Roche, and Novartis to expand their market presence. Salil Kallianpur, a pharma analyst, said the GST cuts reduce the maximum retail price (MRP) of medicines, but the real impact will depend on how much of the benefit companies pass on. “Pharma companies decide MRPs. They may lower prices fully, partially, or not at all, depending on competition and margins,” he said.
With the National Pharmaceutical Pricing Authority (NPPA) pushing for compliance, industry watchers expect more competitive pricing in the coming months. Lower GST also reduces working capital tied up across the supply chain, which could encourage smaller distributors and chemists, particularly in semi-urban and rural areas, to stock a wider range of medicines. Public hospitals and state procurement agencies may stretch their budgets further, potentially improving drug availability. These changes could expand the market reach of firms with strong portfolios in oncology, rare diseases, and critical therapies.
However, Kallianpur cautioned that GST relief has not been extended to key starting materials (KSMs) and active pharmaceutical ingredients (APIs), meaning manufacturers may face margin pressure. “While Indian companies may see higher demand, input costs remain unchanged, and cheaper imports from China could intensify competition,” he noted.
Industry experts such as Saransh Chaudhary, President, Global Critical Care, Venus Remedies, highlighted that the GST revisions are a positive step for affordability, especially in Tier II and III cities. “The government has addressed a pressing barrier to treatment costs. What will matter now is ensuring that lower taxes translate into tangible access for patients across the healthcare system,” he said.
Suresh Nair, tax partner at EY India, said the citizen-focused reforms promote equitable healthcare, strengthen public health, and reinforce India’s global pharmaceutical leadership.