Dolo650 Maker Gave Freebies Worth Rs1,000 Crore to Health Professionals: CBDT
Moneylife Digital Team 16 July 2022
The central bureau of direct taxes (CBDT) has accused Micro Labs Ltd, the makers of the famous Dolo-650 medicine tablet, of indulging in 'unethical practices' and distributing freebies of about Rs1,000 crore to doctors and medical professionals in exchange for promoting its products. Dolo650, which was in high demand during the COVID-19 waves, still remains one of the most prescribed medicine by most doctors.
Last week, the income tax (I-T) department searched 36 premises of Bengaluru-based Micro Labs across nine states. The company has a presence in over 50 countries.
During the search operations, incriminating evidence in the form of documents and digital data was seized. The initial analysis of the evidence revealed that the group had been debiting in its books of account unallowable expenses on account of distribution of freebies to the medical professionals under the head sales and promotion.
These freebies included travel expenses, perquisites and gifts to doctors and medical professionals for promoting the group's products under the heads 'promotion and propaganda', 'eminars and symposiums', and 'medical advisories'.
The CBDT says, “The evidence indicates that the group has adopted unethical practices to promote its products or brands. The quantum of such freebies detected is estimated to be around Rs1,000 crore.”
In a statement, CBDT further says the I-T department seized ‘unaccounted’ cash of Rs1.20 crore and gold and diamond jewellery of Rs1.40 crore.
The CBDT also alleged certain other irregularities on part of the group that has a presence in more than 50 countries and manufactures pharma products and active pharmaceutical ingredients (API).
The quantum of tax sought to be ‘evaded’ through such means is estimated at over Rs300 crore, the CBDT says in the statement. It added that the department also found instances of ‘violation’ of provisions of tax deduction at source (TDS) under Section 194C of the I-T Act in respect of transactions under contracts entered into with the third-party bulk drug manufacturers.
A team of more than 20 officers attached to the I-T department conducted the raids on the office of the Bengaluru-based pharmaceuticals company located on the Race Course Road last week.  Simultaneous raids were conducted in 40 locations by 200 officers across the country, including New Delhi, Sikkim, Punjab, Tamil Nadu and Goa. The residences of Micro Labs CMD (chairman and managing director) Dileep Surana, director Anand Surana were also raided.
Dolo-650, an analgesic (pain killer) and antipyretic (fever-reducing) oral tablet, was being extensively prescribed by doctors and medical shop owners for COVID-19 infected patients to reduce pain and fever.
The company has struck gold in successive waves of COVID-19 pandemic. The company has sold 3,500mn (million) tablets since the COVID-19 outbreak in 2020 and earned revenues of Rs400 crore in a year crushing all rivals, sources say. The sales of Dolo pill broke all records. 
1 year ago
revenue intelligenc agencies only make noise
1 year ago
Unethical is not the same as illegal. The fact that the company was accounting for this expenditure under heads that properly describe the nature of the expenditure implies that they and their auditors consider such expense legitimate. To give wide publicity and astonishing numbers without there being an actual determination of wrong-doing raises questions...
1 year ago
You said that the company ha "earned revenues of Rs400 crore in a year" against a sale of 3500 million tablets whereas it has given freebies of Worth Rs1,000 Crore to Health Professionals. Need to be reconciled
1 year ago
Revenue is 400 crore and freebies is 1000 crore. Are not we Missing logic ?? Is the raid politically motivated ?? Nowadays it has become common..
Replied to gbrhyd comment 1 year ago
This appears to be game played by rivals. Figures given are highly exaggerated and suspect. Tax Dept should be careful before releasing such critical news without full investigation. T
1 year ago
limit of exaggeration 1000 crores what is turnover of the company .. ??
1 year ago
I think govt need bribe as company got good market during covid time. It's media who marketed dolo650. As doctor i have never seen company given freebie for paracetamol sale . Politician and judicial should not drag company like blackmailing. U can directly beg money, no one will stop.
1 year ago
It is pure manipulation to put micro labs in bad name same amount or more must have been given by some Gujarat based pahrma company to do that, Let's consumer decided did they got benefited and every mature person here knows pahrma industry do that what CBDT have to say about other companies on this unethical practices raid them as well which are in Gujarat and have opened their hospital
1 year ago
"The quantum of such freebies detected is estimated to be around Rs 1,000 crore.”
"earned revenues of Rs 400 crore in a year"
This makes no sense at all.
Replied to danny23 comment 1 year ago
Great research
Meenal Mamdani
1 year ago
Indian consumers are stupid if they take the pill prescribed by docs without looking up what it contains on the internet. A cursory search shows that this tab is nothing else but paracetamol which is widely available in India under various brand names.
Yes, the docs are guilty of prescribing this drug to the exclusion of other paracetamol brands and they should be penalized for making their patients pay a high price for a cheap medicine.
But is it not high time that educated Indian consumers take greater initiative in eliciting information about their health care?
Replied to Meenal Mamdani comment 1 year ago
A patient doesn't take chances with an alternative medicine, even when it is cheaper. She places faith in the doctor who prescribes the medicine. And doctor prescribes a medicine of company which gives him freebies.
Replied to pgodbole comment 1 year ago
Does it mean doctors prescribe irrespective vitality only for freebies setting aside patient's cure.
Replied to Meenal Mamdani comment 1 year ago
Generally patients and their relatives follow medical professionals when it comes to taking "prescribed medicines" in recommended doses. This is 100% correct, as looking up composition of a (prescribed) medicine on Internet and deciding whether to take that or something else is not safe. Not doing such a (internet) search this is not foolishness or stupidity.

During SARS-COV-II pandemic, doctors followed the recommendations of task force and were prescribing paracetamol, which controlled the fever. So there was nothing wrong in efficacy of this medicine which contained paracetamol.

It is the manufacturer who apparently paid (some) doctors / health care professionals / facilities to prescribe only Dolo 650 and these doctors took the promotional gifts etc. and did just that, both these actions are wrong.
Sushila Pursnani
1 year ago
Why no windfall tax was considered for pharma and diagnostic companies?
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