Drug Shortage in Several Areas of Tamil Nadu Since GST Implementation

Drug Shortage in Several Areas of Tamil Nadu Since GST Implementation

CHENNAI: A shortage of drugs has affected the state since July 1 when the Goods and Services Tax (GST) kicked in, with dealers and distributors uncertain over the taxation structure and facing software-related billing issues. Karthik Nagappan, who had to check a half a dozen pharmacies before locating one that had the medicine prescribed for his son, said the situation was tough.

Dr T N Ravi Shankar of Deepam Hospitals said it was particularly difficult for people with conditions like diabetes and hypertension. “Luckily at our hospital, we have all emergency drugs. But antibiotics are in short supply and we are rationing it. Our buffer stock will last us 2-3 days…” The problem was caused when distributors sharply brought down their inventory before July 1 and still hadn’t figured out the taxation rate for drugs. So, they were not billing for a couple of days, leading to many smaller players exhausting their supply, he said.

Chains like Apollo Pharmacy, anticipating problems, increased the stock a week earlier. “… we prepared in advance. We were able to start billing on July 1 itself. But there were pharmacies which couldn’t. While within city limits drug supply is still manageable, it will be more difficult for rural and semi-urban areas,” said Shanti Chand, whose Moti & Co supplies to 700 pharmacies in Chennai with stocks from Ranbaxy, Cipla, Sun Pharma.

Besides, given the heavy volumes, the site (for registering under GST) has been crashing regularly. Muthu Pharmacy in Mandaveli, despite trying since June 15, is yet to get a GST registration number.

Dr R Jayaprakash, director of clinics, Tamil Nadu Veterinary and Animal Sciences University (TANUVAS), said they got their chartered accountants to register 15 days ago. “We’ve been given a temporary GST number, which will later be converted into the permanent number.” Online drug store NetMeds, like the Apollo Group, increased its inventory a week before GST.

“We knew there could be teething troubles. So we prepared accordingly. Many of the smaller pharmacies are facing difficulties when it comes to drugs; but we expect the situation to normalise in the next two-three days once billing resumes,” said Pradeep Dadha, CEO. A vendor operating in two states might have to file 35-40 returns. “Someone operating in multiple states might have to file as many as 200 returns,” said chartered accountant Pankaj Dharamshi. Vendors also said there was confusion over whether the existing/old stock should be returned to the manufacturers or sold to hospitals, leading to a delay in billing.

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