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Budget 2019: Pharma players seek support for bulk drugs, funds for R&D, tax relief

The Indian pharmaceutical industry players believe it is high time for the government to articulate a clear blueprint to support manufacturing and research

twitter-logo E Kumar Sharma   New Delhi     Last Updated: June 25, 2019  | 14:05 IST
Budget 2019: Pharma players seek support for bulk drugs, funds for R&D, tax relief

The Indian pharmaceutical industry expects the Union Budget 2019 to focus on measures that give a push to the sector and create new growth enablers at a time when China is taking a lead in manufacturing Active Pharmaceutical Ingredients (APIs) or bulk drugs and formulations as well. Industry players believe it is high time for the government to articulate a clear blueprint to support manufacturing and research. They expect the government to put in efforts to create global capacities by allocating more funds to the pharma sector.

Suneeta Reddy, managing director, Apollo Hospitals feels that the government should extend some incentives to the healthcare sector because not only it creates jobs but also is involved in the well-being of the people. These incentives could be measures to help build the healthcare infrastructure with a clear focus on reducing the cost of long-term funding while improving the cash flow for existing players and extending tax benefits via section 35AD of the Income-Tax Act that provides investment-linked incentives.

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Reddy also hopes for a reduction in customs duty on some of equipment. One of the major impediments, however, is goods and services tax (GST) that has emerged as an additional cost for healthcare players because inputs are taxed while there is no GST on outputs. Taking a cue from Ayushman Bharat, some players are of the view that the government should look at making insurance coverage mandatory for all employers, which has potential to cover the middle 40 per cent of the population.

Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance points out that in a bid to boost the manufacturing of APIs or bulk drugs, the government needs to help create infrastructure for global capacities the way China did it. Therefore, the Budget 2019 should allocate some funds to create at least three to four megaparks. He further says that it is time for the government to increase expenditure on healthcare from 1.2 per cent to 1.5 per cent of GDP in the first year and to 2.5 per cent in the next five years. There is a need for building talent pool as well. For instance, there are 350-400 district hospitals in the country; the government should explore ways to convert them into medical colleges, suggests Jain. He is also in favour of increasing the support for companies spending on research and development to spur the innovation in the country. However, one thorny issue facing the pharma industry is promoting the quality culture. How can Budget ensure this? Jain feels one of the ways is to strengthen the drug regulatory system by equipping the regulators with man and machine.

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