India is home to the third largest pharma industry in the world and the entire industry will be waiting for Finance Minister Arun Jaitley's budget with bated breath as they see how the Union Budget 2014-15 helps or hinders their beloved industry. That they pharma industry in India is huge is without doubt considering, the industry is worth a staggering $12.26 billion and holds a market share of $14 billion in the US alone. And it's believed the industry will continue to grow at 14-17% till 2016. While there have been occasional hiccups, there's no denying the immense potential that the generic drug capital of the world presents not only to its citizens' welfare, but also to those residing in the developing world who can't afford drugs made by first-world companies. Here are some of the demands of the pharma industry from this budget:
According to Dr Arun Singh, a Senior Economist at Dun & Bradstreet, India there are some expectations at the core of which is the hope that finally the health industry will be given infrastructure status. Infrastructure status would allow the health sector to receive more help from the government. It would allow people to set up more hospitals and labs, hire more docs and even allow FDI in healthcare. He said: 'We expect infrastructure status for healthcare savings from this deduction can be reinvested back by companies to enhance healthcare facilities. Further, we expect waiver of service tax on health insurance premiums which will lead to reduction in cost for the consumer.'
He also hoped that the number of drug inspectors would be doubled in the next three years which combined with state-of-the-art testing labs will help the pharma industry meet global standards.
Along with that he hoped for weighted deduction for expenditure outside the approved R&D facility. He said: 'Weighted deduction for expenditure outside approved R&D facility is expected A weighted tax deduction of 200% is permitted on in-house R&D expenditure. Expenditure pertaining to R&D conducted in-house such as clinical trials is demanded by the industry to be eligible for weighted deduction, if carried outside the approved R&D facility. It is likely that Government may waive taxes on instruments and equipment imported for analytical and R&D use to enhance quality of pharmaceutical products for which sophisticated instruments are needed.'
Along with this he hoped that the government would:
Another innovative desire was voiced by Ranjana Smetacek, Director General of the Organisation of Pharmaceutical Producers of India in her column in ET had to do with more favourable conditions for scientific research in India. She wrote: 'R&D is a segment which can become a key enabler of growth for the Indian pharma sector. To encourage investment in R&D, any expenditure related to research conducted in-house i.e. clinical trials, bioequivalence studies, regulatory and patent approvals, should be eligible for weighted tax deduction, even if these activities are outsourced. Currently there are no specific tax benefits available to units engaged in contract R&D or undertaking R&D for group companies. Benefits should be provided for units engaged in the business of R&D and contract R&D by way of deduction from profits.'
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