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Sanjiv Shankaran

FOR the pharmaceutical sector, the Budget was a letdown. Conspicuous by its absence was a package of incentives for research and development (R&D) at a time when the domestic industry needs it most.

The industry has had to settle for piecemeal measures that came in the form a change in excise duty structure for select drugs and a lowering of the peak level of Customs duty from 35 per cent to 30 per cent.

However, MNCs, as a group, can cheer. The reduction in the peak Customs duty from 35 per cent to 30 per cent should lower costs. MNCs tend to rely more on imported raw materials and this reduction should make them more competitive. At present the patent regulations present Indian companies with the opportunity to duplicate a new drug introduced by any MNC at a lower cost. Therefore, the cut in Customs duty should enhance the competitiveness of MNCs. GlaxoSmithKline, Pfizer, Novartis and Aventis should benefit from this.

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