Budget 2024: Finance Minister Nirmala Sitharaman will announce the Union Budget 2024-25 at 11 am today. Ahead of the Budget 2024-25, industry leaders of the pharmaceutical sector are expecting prioritisation of financial incentives and investment in R&D.
According to Ajay Kakar, CEO, Salve Pharmaceuticals, the Union Budget for 2024-2025 should focus on financial incentives in a number of critical industries, including regulatory framework improvements and innovation. This will boast innovation and industrial growth in the personal care, e-commerce, pharmaceutical, and cosmetic industries, Kakar said..
“We need to invest more in R&D to encourage businesses to adopt new technologies and develop innovative products. Policies in the pharmaceutical industry that speed up the approval processes while also providing financial incentives for drug development are significant. The shift towards using natural raw materials strengthens the practice of organic farming, which benefits the personal care industry while encouraging the use of sustainable resources,” Kakkar told Financial Express.com.
Policies that improve digital infrastructure, reduce logistical costs, and provide tax incentives for online enterprises will all help the e-commerce industry grow. As a result, Indian firms can expand their customer base and enhance the overall customer experience.
He also highlighted that the input credit process for exporters should be streamlined to enhance efficiency and reduce administrative burdens. Simplifying this process will ensure that exporters can easily claim and receive their input credits, thereby improving cash flow and reducing delays.
“Additionally, the bill settlement process should be expedited to facilitate quicker financial transactions and settlements. By accelerating this process, exporters can maintain better liquidity and financial stability, which is crucial for sustaining and growing their businesses. Together, these improvements will create a more supportive and efficient environment for exporters, enabling them to focus on expanding their markets and increasing their competitiveness globally,” he said.
Meanwhile, Srivardhan Khemka – Director – Sanjivani Paranteral Ltd. revealed that to achieve a $130 billion industry by 2030, the budget should prioritize research and development, following the example of last year’s Promotion of Research & Innovation Program (PRIP) Scheme.
“This goal can be met by investing more in integrating technology and AI to enhance speed and accuracy, we must look at overall health care while developing the infrastructure with a focus on medical colleges, nursing colleges and reforming health insurance thereby ensuring universal health care. Further the budget must also look at increasing budget allocations to public health insurance programs to expand coverage, ensuring more people have access to necessary medications. We anticipate policies that assist the pharmaceutical sector with tax relief, such as lower or nil GST rates, to facilitate business operations,” Khemka told Financial Express.com.
Additionally, considering the pharmaceutical sector’s reliance on exports, we expect credit schemes and policies to support international trade. Simplifying access to international markets will strengthen India’s role in the global pharmaceutical industry, he said.
“Lastly, to promote the “Make in India” initiative, the budget should include low-interest rates and grants to boost domestic manufacturing setups, particularly for domestic API manufacturers,” he added.
Moreover, Deepak Pahwa, Director, Delair highlighted that the pharmaceutical industry is optimistic about the upcoming budget, especially following the government’s implementation of enhanced quality control measures like Good Manufacturing Practices and revised Schedule M. With the Indian pharma sector making significant strides globally, increased budget allocation can bolster our international standing.
“We anticipate initiatives incentivising R&D to support the local manufacturing of high-quality pharma products. Additionally, PLI schemes could greatly assist in establishing advanced manufacturing facilities and integrating cutting-edge technologies and machinery. These steps are vital for promoting innovation and sustainable growth within the industry,” Pahwa told Financial Express.com.
Sanjay Vyas, Executive Vice President and Managing Director, Parexel India highlighted that they are witnessing a dynamic shift in the pharmaceutical landscape.
“The industry’s push for R&D incentives is a welcome sign. With this focus in mind, expectations towards similar allocation of budget towards these areas is expected from the upcoming budget. With the Indian Pharmaceutical sector trying to reach the USD 130 Billion target by 2030, there is a renewed spirit of research in the areas of cell and gene therapy, new molecular entities, biologics and biosimilars. A strong focus on innovation will not only propel India’s generics market but also make it a hub for ground-breaking therapies. We’re particularly interested in collaborations that leverage India’s strengths in clinical research infrastructure and patient diversity. By fostering a collaborative environment between industry, research institutions, and the government, we can unlock India’s potential to become a global leader in pharmaceutical innovation,” Vyas told Financial Express.com.
The budget can also focus on technological advancements such as Gen AI, where the government can boost investments in AI, identify new research areas for the pharma sectors and additionally promote academia-industry collaboration, he said.
“The budget can also focus on implementing centralised data repositories for the country such as Electronic Health Records (EHR) and a centralised medical record database, to maintain transparency and avoid discrepancies,” he added.
Moreover, Nikkhil K Masurkar, CEO, Entod Pharmaceuticals revealed that he is expecting policies that nurture innovation and growth in the pharmaceutical sector.
“The government should incentivise research and development (R&D) by increasing the weighted tax deduction for R&D expenditure from 100% to 200%. This would encourage pharmaceutical companies to enhance their R&D efforts, bolstering India’s status as a global leader in innovative healthcare solutions. The budget should focus on enhancing healthcare infrastructure, promoting indigenous manufacturing, and ensuring the affordability and accessibility of medicines. Streamlining regulatory processes and reducing bureaucratic hurdles are also crucial for the industry’s growth,” Masurkar told Financial Express.com.
Key improvements include simplifying and expediting regulatory approvals for new drug launches and clinical trials, which would accelerate innovation and patient access to advanced treatments. Investment in skill development and technology adoption across the pharmaceutical value chain is essential to boost productivity and competitiveness, he said.
Lastly, reducing the regulatory compliance burden is vital for fostering a conducive business environment. Implementing a unified regulatory framework to harmonise standards and processes across regulatory bodies would streamline compliance, promoting transparency and accountability in the sector, he added.
According to Arjun Juneja, Chief Operating Officer, Mankind Pharma Limited and Chairman, Pharma Committee, FICCI, the Indian pharmaceutical sector stands at a crucial juncture.
“A supportive budget can further accelerate the industry’s significant growth potential. Key priorities include increased R&D funding, strengthening healthcare infrastructure, and streamlining the GST framework. We urge the government to prioritize increased public healthcare spending, reaching 2.5% of GDP, to ensure wider access to quality medicines. Strengthening R&D infrastructure and fostering innovation are crucial for long-term success. Enhancing export incentives (RoDTEP) and expanding PLI schemes will promote local manufacturing. Regulatory reforms and a renewed focus on primary healthcare, particularly in rural areas, are essential for our sector’s resilience. Attracting NRI medical talent back to India will solidify our position as a global pharma leader,” Juneja told Financial Express.com.
Dr. Krishna Prasad Chigurupati, Chairman and Managing Director, Granules India Limited emphasised that India’s pharmaceutical industry, recognised as the ‘pharmacy of the world,’ is on the verge of a major transformation.
“Indigenous manufacturers are evolving with superior, cost-effective products. As a fast-growing sector, it is poised to become a global leader. To achieve this goal, the Indian government needs to take bold strides, including creating innovation zones with benefits and infrastructural support, and encouraging collaboration between public and private entities. The pharmaceutical industry needs more investment, and the government must incentivize and fund cutting-edge drug research and development. Streamlining regulations to speed up approvals for new treatments and investing in educating a workforce skilled in pharmaceutical innovation are crucial. Simultaneously, authorities need to weed out players that don’t conform to high-quality drug standards accepted globally, to become more credible and contribute to export earnings. These efforts will usher in a new era of Indian pharmaceutical leadership, characterized by path-breaking outcomes. The industry can then be part of India’s ambitious Viksit Bharat journey,” Dr. Chigurupati told Financial Express.com.
The Indian manufacturing sector is projected to contribute USD 800-900 billion to the GDP in the next four to five years.
“India has the potential to become a hub for sustainable manufacturing, contributing to the fight against climate change. We are at a tipping point of transformation that integrates sustainability with advanced technologies. This approach is essential to address the global climate crisis. As an industry leader, Granules India exhorts the Union Government to aggressively pursue its ambitious renewable energy and green hydrogen projects. This will demonstrate the country’s commitment to sustainable development, economic growth, energy independence, and global leadership in reducing carbon emissions,” Dr. Chigurupati added.