GST: More than two per cent rise in input costs unfeasible for private health sector, says Apollo chief

Private hospitals may not be able to take in more than a 2 per cent rise in input costs post GST, Apollo Hospital chairman Prathap Reddy said on Tuesday. There are apprehensions of an increase in prices of drugs once the new taxation system rolls in from July 1 but Reddy’s statement may indicate broader concerns for the healthcare and pharma industries.

“We are still examining the impact GST will have on the healthcare industry. We can say that if the costs increase by something like 2 per cent we, the private sector, most of us – may be able to absorb that without impacting patients. However, if it is 3-4 per cent or even higher then we will have to pass it on to patients,” Reddy said.

While education and healthcare are out of the GST net, various rates of taxes are applicable to drugs, equipment’s, APIs etc. Active Pharmaceutical Ingredients (APIs) are taxed at 12 per cent and this would have a downward spiralling effect. A non-profiteering clause makes it compulsory for input tax credit advantages to be passed to customers.

Reddy praised the health ministry’s decision for universal screening for diabetes, hypertension and some cancers, repeatedly stressing that non-communicable diseases were India’s big challenge in the coming years. He gave the example of the 170 hamlets near his own village where the group over the last three years has screened 60,000 people. “We have made a presentation to the Niti Aayog on this model. We were told somebody from health, may be the secretary, should see it,” Reddy said.

He hailed the government decision to put a stopper on stent prices but claimed that stocks of the high-end ones had run out. “They (stent makers) do not say anything just say that it is out of stock. Some people are going abroad (to get high-end stents). There is not much of a change though. The number of procedures we were doing has not changed. I support the government’s decision. Basically, what happens in patent products is that there is a price reduction when the patent period is over. In this case the stent firms were not passing it on to us though they were doing so in Europe.”

However, he said the idea of capping prices of more such devices — the list includes syringes, cannula, catheters etc — would make us a “government control” country, reflecting his dislike to the idea. He underlined the need to market India as a medical tourism destination.