By Akshay Daftary
With the upcoming announcement of the Union Budget 2022 by Finance Minister Nirmala Sitharaman on February 1st the healthcare sector hopes for a boost in funding considering the importance of the sector in the light of the on-going pandemic. Both individuals and governments place health high on their priority list and its importance has been amplified given the external environment and circumstances. While various flaws in the existing healthcare system in India were exposed during the pandemic in India, however, the government has reacted swiftly, by proposing reforms and policies that have played a role in addressing the problems.
While the COVID-19 epidemic is currently a focus and would remain at the forefront for the next few months, prevention and wellness should receive a greater share of funding to ensure drug development projects for life saving therapies remains a strong priority. Our Government has also taken a lot of efforts and measures to fight COVID pandemic and uplift our healthcare infrastructure. Apart from interim COVID stimulus packages action pandemic prompted our government to increase allocation to healthcare sector to 1.8% of GDP in 2021 which was 137% increase over the previous year, this focus on healthcare should continue and I think our government should further increase healthcare spending to 2.5% to 3% of GDP this year and should not wait till 2025 to achieve the earlier target of increasing healthcare spending to 2.5% of GDP. European countries’ spending on healthcare is around 9% of GDP. Long term aim of our country should be to reach that level within the next 7 to 10 years. Healthcare should be treated as a basic need of each citizen and should be made available to all at affordable cost.
A number of government policy initiatives have been initiated recently, including notifications of the retail sale of drugs at doorsteps, telemedicine guidelines, and Production Incentive Programs (PIPs) for domestic manufacture of essential Drug Intermediaries (DIs), Key Starting Materials (KSMs), Active Pharmaceutical Ingredients (APIs), and Medical Devices. An initiative to develop four Medical Device Parks was also announced to increase competition and improve the accessibility and affordability of medical devices. The National Digital Health Mission (NDHM) was also launched by the government.
Though the government had issued various stimulus economic packages of lakhs of crores during first and second wave of Covid in terms of food subsidies, fertilizer subsidies, loan guarantee and concessional credit, loan moratorium etc. direct benefits of this stimulus package on working class people and businesses are limited. Unlike other countries who’s Covid relief packages are directly aim of befitting people and businesses like reduction in VAT rates for certain period, deferment of payment of taxes, additional tax exemptions to employer and employees as well as monetary government grants towards loss of revenue during the pandemic period apart from other stimulus packages, I expect our government should follow similar path and should give more direct benefits
I would also like the government to give further boost to the pharmaceutical and Clinical Research industry. I will be happy if the government does the following apart from increasing spending on healthcare.
- Nil or No GST or CRO offering clinical trials and allied services to pharmaceutical companies
- Weighted deduction on Research and Development under Section 35(2AB) to increase to 200% to incentivize pharmaceutical companies to undertake more research and development work so that spending for new drug discovery and innovation can increase. Also scope of 35(2AB) to include FMCG and other companies in the research and development of products of medicinal use as well as food supplement and nutrition and cosmetics.
Our country has a strong ambition to be a 5 trillion economy by 2025 and this will be difficult to achieve if we don’t take bold steps and support businesses in the healthcare sector to overcome the adverse effects of Covid 19 pandemic and continue to play their role in facilitating drug development programs and ensure India’s pivotal role in the global healthcare scenario.
(The author is Director, SIRO Clinpharm. Views expressed are personal and do not reflect the official position or policy of the Financial Express Online.)