Pharma cos seek higher allocation towards healthcare, boost to R&D
“A pivotal aspect of this commitment lies in allocating 2.5-3% toward healthcare, a critical move to empower the industry in meeting the growing healthcare needs of the nation. Significant strides have already been made toward bolstering pharma manufacturing through recent developments and the signing of MoUs at the Vibrant Gujarat event,” said Nikhil Chopra, CEO and whole-time director of JB Pharma.
“I also anticipate the allocation of funds toward enhancing the pharmaceutical supply chain and distribution infrastructure. The government should also consider incentivizing domestic API (active pharmaceutical ingredients) manufacturers by providing them with financial incentives. The finance minister can then stimulate increased production domestically, contributing to a more stable and self-reliant pharmaceutical industry.”
The government has already deployed three major schemes for pharmaceutical manufacturing: the production-linked incentive scheme for bulk drugs (PLI 1.0) with a budget of ₹6,940 crore in 2020, PLI for pharmaceuticals (PLI 2.0), and a ₹3,000 crore scheme providing financial aid for the creation of bulk drug parks.
India is the third largest producer of API, accounting for an 8% share of the global API industry.
More than 500 different APIs are manufactured in the country, contributing 57% of APIs to a prequalified list of the WHO.
These investments, industry players believe, can be used in tandem with the integration of the latest digital technologies to ensure a streamlined and technologically advanced system.
Further, this transformation, they say, would facilitate real-time monitoring, leading to better access and uninterrupted deliveries of pharmaceuticals and through the incorporation of digital advancements, the efficiency and transparency of the supply chain can be significantly improved. Icra Ltd expects the Indian API industry, which had an estimated size of ₹1– ₹1.1 trillion in CY22, to grow at a CAGR of 7–8% over the next three to four years.
“A significant boost in healthcare spending tops our list of priorities. Increased allocations are crucial not only to strengthen our healthcare infrastructure but also to ensure quality healthcare services reach every corner of our diverse nation.
We also believe research and innovation is the core of our industry’s growth and allocating increased funds and incentives to what has already been initiated will encourage research and innovation through centres of excellence which will further catalyse advancements in pharmaceuticals,” said Sandeep Jain, joint managing director of Akums Drugs & Pharmaceuticals Ltd.
The government has announced several initiatives in the R&D space, including the launch of a new policy on R&D and innovation in the pharmaceutical and MedTech sectors last year.
The approved scheme, PRIP (Promotion of Research and Innovation in Pharma MedTech Sector) has a capital outlay of ₹5,000 crore to transform the Indian pharmaceuticals sector from cost-based to innovation-based with growth by strengthening the research infrastructure of the country.
The scheme aims to promote industry-academia linkage for R&D in priority areas to inculcate a culture of quality research and nurture the pool of scientists in the country.
In the last budget the government also introduced key initiatives, including the establishing of centres of excellence for artificial intelligence to enhance manpower skills, develop cutting-edge applications, and scalable problem solutions in critical areas including health.
The Central government also announced a programme to promote research and innovation in the pharma sector through centres of excellence, while encouraging collaborative research and innovation by public and private medical college faculty and private sector R&D teams through select labs of the Indian Council for Medical Research.
Anil Matai, Director General of the Organisation of Pharmaceutical Producers of India (OPPI), said, “To further support research to develop innovative pharma products, OPPI believes that the concessional tax rates under Section 115BAB of the Income Tax Act, 1961 should be extended to companies solely engaged in R&D of pharma as well, beyond those related to manufactured articles.
Simultaneously, we call for increased incentives for innovation and to attract foreign investment in advanced research.”
Section 115BAB of the Income Tax Act, 1961 aims to support and promote the growth of domestic manufacturing enterprises, providing them with the opportunity to pay taxes at a lower rate of 15%.
It is also aimed at boosting the number of new manufacturing startups in the space that the government believes to be a means to encourage industrial investment while reinforcing its ‘Make in India’ strategy.
Further, to promote innovation within the industry, various measures have been proposed, such as raising the limit for foreign direct investment —up to 100%, FDI is allowed through automatic route for greenfield pharmaceuticals projects—and implementing a new strategy for protecting intellectual property rights.
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Published: 30 Jan 2024, 12:12 AM IST
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