Drugmakers may get EU tariff relief

BRUSSEL: The European Union may trim import tariffs on Indian drugmakers including Ranbaxy Laboratories because of evidence that subsidies fell, a step that would scale back protection for EU-based units of Novartis AG.

The EU imposes duties of as high as 32 per cent on Indian antibiotic exporters to counter subsidies through about 10 programmes.

The EU said it would review the duty rates because two programmes, the Duty Entitlement Passbook Scheme offering credits and the Income Tax Exemption, may have reduced aid.

"The benefits from two subsidy schemes appear to have significantly decreased," the European Commission, the 27- nation EU's regulatory arm in Brussels, said today in the Official Journal. The duties' "present level may no longer be necessary to counteract the current subsidization."

The EU review, due to last as long as 15 months, would cover the anti-subsidy duties against five Indian antibiotic exporters. In addition to Ranbaxy, the companies include KDL Biotech Ltd, Nectar Lifesciences Ltd, Surya Pharmaceuticals Ltd and Nestor Pharmaceuticals Ltd.

The levies, which apply to antibiotics known as amoxicillin trihydrate, ampicillin trihydrate and cefalexin, amount to 30.3 per cent for Ranbaxy, 28.1 per cent for Surya Pharmaceuticals and Nectar Lifesciences, 25.3 percent for Nestor Pharmaceuticals and 17.3 per cent for KDL Biotech.

The EU imposed the duties for five years in May 2005 to protect Novartis-owned Sandoz businesses in Austria and Spain.