Union Budget 2024: All eyes are on the upcoming Union Budget as India’s pharmaceutical industry, a global leader in generics, waits with bated breath. With ambitious targets to not only be the world’s pharmacy but also a hub for innovation, industry leaders have high hopes for budgetary measures that will propel them forward.
Industry bodies have urged that there is a need to incentivise R&D investments, offer corporate tax concessions and establish an effective intellectual property rights regime to push the growth of the domestic pharmaceutical industry.
Outlining the sector’s wish list for the upcoming Union Budget, Organisation of Pharmaceutical Producers of India (OPPI) Director General Anil Matai urged the government to explore methods to incentivise R&D investments, such as deductions on R&D expenses, research-linked incentives for MNCs, and corporate tax concessions.
Also Read: Budget 2024: Income Tax Standard Deduction For Salaried Employees May Rise To Rs 1 Lakh
The initiatives will help in accelerating R&D and innovation in the sector, he added.
“Recognising the high-risk, long-gestation nature of R&D, we suggest extending the scope of section 115BAB of the Income Tax Act, 1961 to companies solely engaged in pharmaceutical research and development and providing a 200 per cent deduction rate on R&D expenditures,” Matai said.
This would significantly boost the sector’s ability to undertake essential research and development, including clinical trials and patent registration, he added.
Matai also sought establishing an effective intellectual property rights regime for driving growth and encouraging research-based pharma companies, both global and domestic, to introduce innovative therapies in India towards addressing unmet medical needs.
Besides, he sought introduction of incentives for centres and companies that provide specialised training programmes for pharmaceutical employees.
“Incentives for developing treatments for rare diseases are also crucial,” Matai said.
Besides, enhancing the management of rare diseases through more centres of excellence (CoEs), increased budget allocations for incentivising R&D on therapies for rare disease, and import duty waivers are essential, he noted.
“Expanding the list of life-saving drugs eligible for GST/import duty exemptions, including all oncology medications, will further improve patient affordability,” Matai said.
To attract investment and contribute to a more resilient and future-ready pharmaceutical industry, the government should provide incentives for investments in bonds issued by pharmaceutical companies, he added.
OPPI represents the research-based pharmaceutical companies, including AstraZeneca, Novartis and Merck, in India.
Indian Pharmaceutical Alliance (IPA) Secretary General Sudarshan Jain said the policy direction should leverage the industry’s knowledge-driven foundation and the status as a global manufacturing hub.
The thrust should be on quality and innovation, he stated.
Given the high risk, lengthy development periods, and low success rates in research, continuous investment is crucial, he added.
“The 2024-25 budget should introduce policies that provide direct and indirect tax benefits to encourage research and investment in becoming a global benchmark in quality,” Jain said.
IPA is an association of leading research-based pharmaceutical companies in India.
The members include Cipla, Dr Reddy’s Laboratories, Sun Pharma and Lupin.
Budget 2024 Date: The Union Budget for the financial year 2024-25 will be presented in the Lok Sabha on July 23. The Budget Session of the Parliament will be held between July 22 and August 12.
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