CASE: in its new health policy. As a

CASE: CIPLA

De-addiction
segment is valued at over Rs 100 crore annually, and nicotine polacrilex products
constitute around 70 per cent of the segment. Cipla is amongst the major
manufacturers of nicotine gums in India with
their product NICOTEX.

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How Nicotine Replacement
Theory Works

The principal mechanism of action of nicotine replacement
therapy (NRT) is to partially replace the nicotine formally obtained from
tobacco. It provides small and sustained quantities of nicotine without the
harmful gases of smoking, to reduce the severity of withdrawal symptoms and
cravings.If a person relapses to smoking while taking NRT, the cigarette would
be less satisfying and the person less likely to resume. Hence, NRT also
provide a coping mechanism, making cigarettes less rewarding to smoke.

Impact
Of GST

The GST rate on nicotine gums has been fixed
at 18%.

“Due
to an increase in the GST rate on products related
to nicotine replacement therapy from 10
per cent to 18 per cent, there will be a negative impact on accessibility and
availability of this therapy to consumers making it contrary to government’s
larger objective of tobacco de-addiction,” said
a Cipla spokesperson.

CIPLA
also enjoyed the perks of being excise free due to its manufacturing plants
being in the excise-free zones (Jammu & Kashmir, Himachal Pradesh, Uttrakhand and the
northeastern states). After implementation of GST. all entities exempted under payment of indirect tax under any existing incentives scheme of central or state
governments shall not continue under the GST regime and existing units shall pay tax under the GST regime. Under the discretionary powers left to it by the
Council regarding these incentives, the finance ministry has proposed to provide
budgetary support for refunding its share in GST to such units to which exemptions in indirect taxes were
granted, for promoting industrialisation. According to a finance ministry official, a budgetary
provision will be made to refund the central government’s share in those
incentives for the residual period of the unit. The refund will apparently be
to the extent of 58 per cent of the Centre’s share of GST..

At
present, India is estimated have over 100 million smokers and is said to
account for a fifth of all tobacco-related deaths worldwide.

The
central government included tobacco de-addiction as one of its seven priority areas in its
new health policy. As a part of the policy, the government aspires to
reduce tobacco use by 15 per cent by 2020 and 30 per cent by 2030.
Introduction of GST is expected to have a significant impact on tobacco
cessation programs ass it will make Nicotine Replacement Therapies expensive.

 

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