The Hindu Business Line : Drugs sector unhappy with lukewarm treatment

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Mumbai Feb 28 Finance Minister Mr P.Chidambaram has not managed to seize the moment, according to heavyweights of the pharmaceutical industry.

Though happy that Budget 2007-08 has extended the 150 per cent weighted deduction on expenditure incurred on research for another five years, no real booster shot was given to the sector, said heads of drug companies, both domestic and multinational.

While the pharmaceutical industry completely missed the Minister's radar last year, "we were hoping to be compensated by a `dream pharmaceutical Budget' this year but that was not to be," said Mr Ranjit Shahani, President of the Organisation of Pharmaceutical Producers of India and Vice-Chairman and Managing Director of Novartis India.

The five-year tax exemption for research up to 2012 should have been given up to 2017, i.e., for 10 years, since pharmaceutical discovery process is risky and lengthy and takes 12-15 years, he said.

The healthcare segment did occupy a significant amount of time and mindshare of the Finance Minister, but given the yawning gap between the requirements for the current and future, the total allocation to this segment has fallen short of expectations.

Healthcare is one of the biggest challenges our country faces, Mr Shahani said.

The National Rural Health Mission allocation has been increased.

Given that 65 per cent of the population, i.e., 700 million people, have no access to healthcare, this increase of Rs 1,740 crore is not adequate to make a real difference.

Also, life-saving drugs should have been fully exempted from Customs duty to reduce prices, he said.

Pfizer's chief in India, Mr Kewal Handa, said that the Minister had missed the opportunity to propel growth.

He was also disappointed that excise duty on drugs was not halved from the existing rate of 16 per cent.

This would have taken care of the distortions in the market, with some companies located in tax-free zones, he added.

Besides, any sop on medicine would in effect have been passed on to the consumer and that opportunity has been missed, he said.

This sentiment was echoed by the CEO of Cipla, Mr Amar Lulla. "It is another opportunity missed."

Mr D.G. Shah of the Indian Pharmaceutical Alliance said that he was disappointed with the "piece-meal" approach to research.

The weighted deduction should have been increased from 150 per cent to 200 per cent and it should have been extended for 10 years, not five.

Also, overseas patent filings and clinical trial expenses have been overlooked, he said.

Mr Glenn Saldanha of Glenmark Pharma said that the industry expected more significant incentives to stimulate Indian research, given that the pharma industry is a growth sector.

Striking a different note, Mr Malvinder Singh, CEO and Managing Director of Ranbaxy, said that he was happy with the extended incentives for pharmaceuticals.

"This will enable vital research work to continue within the country, in a stable environment, and will help to deliver a sustainable India advantage in this sunrise sector."

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