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Impact of GST on ayurvedic drug sector

Dr. Amritpal Singh & Navjot Kaur
Wednesday, July 12, 2017, 08:00 Hrs  [IST]

The implementation of goods and service tax (GST) has been taken place across the country. Ayurvedic drugs fall under the slab of 12 per cent category. Right now, in Ayurveda the tax is 2 per cent for generic and 6 per cent for patent and proprietary products. The Government of India has fixed the rate for generics and patent and proprietary products at 12 per cent. The fixed rate for Ayurvedic cosmetics is 18 per cent. As per industry experts, the herbal extracts may fall under 18 per cent category.

Impact on crude drug market
The regional crude drug markets are located in Amritsar, Ludhiana, Saharanpur, Bareilly, Haridwar, Ramnagar, Tanakpur, Kolkata, and Siliguri. The national crude drug markets are located in Delhi (Khari Baoli), and Mumbai (Navi Mumbai). In each regional market, retailers, wholesalers, manufacturers/pharmacies, and trade associations are involved in Ayurvedic selling/buying trade. The rate of crude herbs varies from crude market to another.

The cost of crude drugs has escalated like anything and the vendors or crude drug suppliers are selling the products at a higher price. As far cost of crude drugs is concerned, there is no regulation from Government of India. This is vital as well as mandatory if Ayurveda has to be developed commercially on lines similar to Traditional Chinese Medicine.

Impact on Ayurvedic drug manufacturing
Ayurveda has documented medicinal use of approximately 850 medicinal plants. The medicinal plants find application in pharmaceutical, cosmetic, agricultural and food (nutraceutical) industry. Ayurvedic system of medicine has become increasingly popular in recent years. In India, 76 per cent of patients visiting the general medicine OPD of a tertiary care hospital use alternative therapies.

The herbs are used as decoctions, infusions, powders, or extracts. Today, there is a growing demand of standardized Ayurvedic herbal extracts. Extracts are prepared by separating the soluble matter from vegetable tissues by the application of a suitable solvent like alcohol, water or ether.

Implementation of GST may mark the end of excise free Ayurvedic manufacturing zones. However, Implementation of GST may play an instrumental role in re-opening of Ayurvedic drug manufacturing units that were closed due to creation excise free zones. Ayurvedic cosmetics can be the buzzword in Ayurvedic drug manufacturing asthey drug fall under the slab of 18% category. This tax on Ayurvedic cosmetics is lower as compared to pure cosmetic formulations.

Positive side
The Ayurvedic drug sector is highly unorganized as per demand and supply patterns of crude drugs are concerned. Keeping in mind the provisions of the GST, several Ayurvedic giants is opposing it. This might make way for setting uniform prices of crude drugs pan India. It might become easier for the Department of Ayush for implementing norms of the Drug and Cosmetic Act applicable to Ayurvedic drugs.

GST on complementary and alternative medicine in other countries
Complementary and alternative medicines are GST free if they are part of the list of the GST Act and provided by the institutionally qualified person.  Acupuncture, Chiropractic, Herbal medicine, Traditional Chinese herbal medicine, Ayurvedic Medicine, Naturopathy and Osteopathy are included in the GST Act.

Future implications
The drug formulation in Ayurveda is based on two principles:
* Use as a single drug.
* Use of more than two drugs.

When two or more herbs are used in formulations, they are known as poly-herbal formulations. Some time herbs are combined with mineral preparations also. The herbs often exist in crude state and Ayurveda describes methods of purification of toxic herbs. Ayurveda has elaborated the fundamental aspects of drug formulation. The herbs are selected according to the disease; other herbs are used to prevent the side effects arising from the main herb. Ayurveda strongly recommends the use of the plant as a whole.

Sarpa-gandha, source of blood pressure lowering alkaloid, reserpine, when used in powdered state is devoid of unpleasant side effects. Reserpine was once regarded as a potent treatment of high blood pressure, and prescribed rarely due to unpleasant side effects. Sarpagandhadi churna is a traditional ayurvedic remedy for hypertension and is still used by practitioners of Ayurveda with success.

As we are aware that herbs are either used as a single entity (as an instance powder of Haritaki) or in combination with other herbs (better known as poly-herbal). The concept of poly-herbal formulation or drugs seems to be more significant in Ayurveda. The number of herbs in a poly-herbal formulation can vary from two to multiple in ayurvedic poly-herbal formulations. Singe herbs used in Ayurveda has been standardized and marker compound has been established. Work on standardization of poly-herbal formulations used in Ayurveda is in progress.

Several coded polyherbal formulations are under investigation for a possible role in the health care system. As an instance, NR-AG-I (diuretic), DLH-721A and DLH-721B (anti-anaphylactic), NR-AG-I and NR-AG-II (renoprotective), Aller-7 (anti-allergic), HP-1 (hepatoprotective and antioxidant), E-721 (anti-asthmatic), Immu-21 and IM-133 (immunimodulatory), HD-03 (cirrhosis) are noteworthy preparations under clinical investigatins.

Ayurvedic companies might be interested in single herb formulation rather than creating a cocktail of several herbs. This may be one solution to bring cost-effective and potential medicines. Several polyherbal ayurvedic formulations are manufactured by ayurvedic manufacturing companies and a few like Triphala, Trikatu are are in great demand.

The future of mineral preparations was killed in overseas market when heavy metal issues in ayurvedic formulations were addressed in an article published in the Journal of American Medical Association (JAMA). Provisions of GST may kill the market of mineral preparations in the Indian market too because they are very expensive.  The same may be the fate of polyherbal and herbo-mineral formulations.

Future for ayurvedic cosmetics
Ayurvedic cosmetics (manufactured under license issued by ayurvedic authority) may be in limelight in comparison to general cosmetics (manufactured under license issued by ayurvedic authority) and derma products (manufactured under license issued by cosmetic authority). Within the provisions of the GST Act, derma products and ayurvedic products shall come under the slab of 12 per cent, whereas, general cosmetics, GST shall be 28 per cent.

Herbal cosmetic products are well included in general cosmetics. In other words, general cosmetic products shall be costlier when compared with ayurvedic cosmetics. Products depicting herbal drugs on the label shall fall under 28 per cent slab. This is the reason to distinguish between herbal or ayurvedic cosmetic.

Regulatory issues
When it comes to the regulatory aspects of the ayurvedic cosmetics, we have limited scientific data towards safety and efficacy. Drug authorities must make it sure that foreign medicinal herbs/extracts are not mixed with ayurvedic herbs is preparing a blend for cosmetics. Several companies are using medicinal plants in ayurvedic cosmetics having an unexplained role in skin-care. These type of products available in the market should be scanned and banned. This can have protective effect on genuine ayurveda product.

Recently, Ministry of Ayurveda, Unani, Siddha and Homeopathy (Ayush) has signed memorandum of understanding with the Advertising Standards Council of India (ASCI) for monitoring of Ayush advertisements in print and electronic media. As per Ministry of Ayush, the main objective of memorandum of understanding is to curtail malpractices in the advertisements related to Ayurveda, Unani, Siddha and Homeopathy drugs. Ayurvedic manufacturing houses should follow the provisions of the Drug and Cosmetic Act. Ayurvedic licensing authorities should ensure all possible help to ayurvedic manufacturing houses.

(Authors Dr. Amritpal Singh is a herbal consultant, Mohali &
Navjot Kaur is assistant professor (Economics), BZSFS Khalsa Girls College, Morinda)


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