India's pharmaceutical industry is preparing for a new phase of growth as sweeping GST reforms promise to make medicines and healthcare more affordable. The sector, which reported 8.7% value growth in August 2025, is expected to see major gains in drug accessibility, pricing and patient volumes.
GST Council's Pharma Reforms
At its 56th meeting earlier this month, the GST Council approved a two-slab structure of 18% standard rate and 5% merit rate, while granting nil GST to 36 life-saving drugs. In addition, GST on several medical devices and equipment has been reduced, and key health and life insurance products have been exempted.
"The GST restructuring in the pharma sector is transformative," said a tax expert. "By reducing GST on all medicines from 12% to 5% and granting nil rates to critical life-saving drugs, it directly lowers patient expenses and improves access."
Cheaper Cancer & Rare Disease Therapies
The reforms are expected to bring relief to patients battling oncology and rare diseases, where treatment costs have been prohibitively high.
- Roche Pharma India therapies like Tecentriq (Atezolizumab), Gazyva (Obinutuzumab), Rozlytrek (Entrectinib), Evrysdi (Risdiplam) and Hemlibra (Emicizumab) will now be GST-free, reducing out-of-pocket costs.
- Drugs from Sanofi, Novartis, Johnson & Johnson, Takeda, GSK, Amgen, Bayer and Boehringer Ingelheim are also set to become more affordable.
- Zolgensma, a gene therapy by Novartis for spinal muscular atrophy priced at nearly Rs 17 crore per dose, has seen an MRP drop of over Rs 11 lakh.
- Daratumumab, used in multiple myeloma treatment and sold at Rs 75,500 per dose, will see a reduction of about Rs 4,700 per dose.
For patients, these reductions are significant. As the MD & CEO of Roche Pharma India put it: "For patients, this isn't just policy-it's hope."
Market Growth Trends
According to PharmaTrac, the Indian Pharmaceutical Market (IPM) touched Rs 2.32 lakh crore in MAT August 2025, with strong growth in:
- Anti-neoplastics (cancer therapies) - 19.7%
- Vaccines - 21.4%
- Respiratory therapies - 17.3%
- Cardiac therapies - 13.2%
Leading companies like Sun Pharma, Cipla and Intas posted double-digit growth, showing strong momentum.
Price Drops to Boost Patient Volumes
Analysts expect that reduced MRPs, along with patient support programs, will onboard more patients from weaker sections of society.
However, challenges remain. Industry experts caution that the GST input tax structure could create an inverted duty situation-inputs taxed at 18% while final medicines are taxed at 5% which may pressure manufacturer margins.
Outlook
Despite concerns, the overall sentiment in the sector is optimistic. As the new GST rates take effect from September 22, 2025, the industry is likely to:
- Recalibrate pricing strategies
- Expand access programs in tier-2 and tier-3 cities
- Support higher patient volumes in high-cost therapies
- Boost innovation and affordability in India's healthcare ecosystem
With lower drug costs and wider accessibility, the GST reforms could mark a turning point for India's pharma industry, balancing affordability for patients with sustainable growth for manufacturers
CAclubindia
