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Tax Waivers Bring Awaited Benefits for Drug Makers and Consumers

Industry: Healthcare & Pharma
Economic Tag: Vat & Tax

The proposed tax waivers for imports of certain raw materials in FY25 aim to benefit consumers and drug manufacturers, particularly in cancer drug production. The reduction in tax on imported APIs for Azithromycin from 15% to 5% and inclusion of six more cancer drugs on the zero-tariff list are intended to stimulate domestic production. However, challenges persist due to the high dollar-taka exchange rate, escalating production costs, and limited local manufacturing capacity for cancer drugs. While consumers may eventually benefit if the taka strengthens against the dollar, drug manufacturers emphasize the need for scaled-up production to reflect tax benefits in product prices and profits. The government has also proposed zero taxes on imports of additional raw materials to support API production. Despite initiatives like the API industrial park, infrastructure constraints hinder commercial operations. While tax incentives on medical devices may lower prices slightly, concerns remain about the extent to which these benefits will translate to consumer prices, with skepticism about manufacturers passing on savings to customers.

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