Tax benefits key to attracting investments

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: Indian pharmaceutical industry has made impressive strides in the global arena across different business segments. Several global pharmaceutical majors are leveraging on India’s cost competitiveness and large pool of technically skilled manpower. India has also emerged as a preferred global supplier of high quality drugs and intermediates at very cost effective prices. Indian companies are working aggressively to get a stronger foothold across various segments such as generics, contract research and manufacturing services and clinical research services. The Indian pharmaceutical industry is on the threshold of becoming a global pharma hub.

To capitalise on this opportunity, India needs to undertake several measures and this year’s annual fiscal exercise is being seen by the global and Indian pharmaceutical industry with keen interest.

In my opinion, the Budget needs to give a major boost to the pharmaceutical industry with incentives for development and creation of intellectual property and discovery R&D. Pharmaceutical companies also feel that direct and indirect taxation should be made simpler. In addition, there should be continuing efforts to establish a more efficient regulatory pathway and faster approvals for clinical trials. Let me highlight these in detail.

Presently the incentives for development and creation of intellectual property are insignificant. If the budget is able to provide tax benefits, we will also be able to attract foreign investments in this area.

Drug discovery has the potential to offer job opportunities to many. Ironically, even though we have the most talented pool of science graduates in the world we still have not been able to discover and take a novel drug to the global market. Drug discovery is a high-investment business and governments of developed nations provide huge incentives in this area. Therefore, the government needs to treat discovery R&D separately and incentivise organisations that are making progress in this area as the investment for taking a single molecule to market runs into millions of dollars.

Moreover, the finance minister should make direct and indirect taxation simpler for the pharmaceutical companies. He should consider the removal of fringe benefit tax (FBT). In addition, continuing efforts to establish a more efficient regulatory pathway and faster approvals for clinical trials are required. These will go a long way towards boosting the clinical research industry as well as Indian innovators.