Express Pharma

Budget 2020: What does the industry want?

Last year in July, Finance Minister Nirmala Sitharaman presented the first Budget of Modi Government 2.0. Since the pharmaceutical industry did not get much attention from the government last year, they have strongly voiced their concerns and expectations about the upcoming financial budget, especially amidst rising concerns about the economy

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We expect the government to give strong support particularly to the API sector
BR Sikri, Chairman, Federation of Pharma Entrepreneurs (FOPE)

The pharmaceutical industry had a lot of hope during the last budget but the government disappointed the life sciences sector. Since the Finance Minister was new to this portfolio, there was hardly any time for the government to prepare an exhaustive budget.

BR Sikri, Chairman, Federation of Pharma Entrepreneurs (FOPE)

We took it in a sportsman spirit and accepted whatever they gave. This year the industry is hoping for strong support from the government as in the recent past, the industry has suffered many setbacks due to frequent regulatory interventions and huge investment by MSME category of units.

Our expectation from the government in the coming years is to have strong support, particularly in the API sector. In the last five years, the government has talked about APIs, but nothing much constructive happened, although many forums and meetings were held at ministry and NITI Aayog level.

Dependability on China is becoming a big threat to the nation’s security and it is high time for the government to focus on to reduce 50 per cent dependability on China. Formulators who use API of domestic source with 100 per cent locally manufactured intermediates, should be exempted from price control.

Similarly, R&D and process development activities both in the finished dosage form and API needs special incentive and we recommend the government to make it a 200 per cent incentive from existing 150 per cent.

The government expects more quality products from MSME and wants this sector to compete with international standards. If that is the case, the government has to come forward with massive financial help to the small scale sector without any burden to pay a higher rate of interest. Such help should be free of interest and that too with sufficient time of moratorium.

Academia is capable enough to produce new technologies and industry is keen to accept such new technologies. But, the government has to take a serious lead in arranging tie-ups between industry and academia. This will reduce dependability on China over a period of few years to come. The government has to take up this matter on priority and seriously.
There is a gap between SLA and CLA understanding the Rules and Act. This needs deliberation between State Governments, Central Government and the Industry. Existing infrastructure within the pharma industry needs further improvement as old industrial townships have outlived their life and need further upgradation. BA/BE is another additional burden on the industry particularly on MSME as each product need to undergo this test. MSME does not have sufficient funds to invest in this head. Moreover, different CROs are charging different rates for such studies and it is a big financial burden.

Government of India has to come forward with streamlining the system and give financial support to small scale without any rate of interest burden, that too the rate of study should be reasonable and affordable.

Changing lifestyle with a spurt in population has led to a rise in geriatric population in India, rising healthcare spending by individuals etc. Government of India, a couple of years back, announced a new health policy, which led to the introduction of Jan Aushadhi Scheme, free distribution of medicines through wellness centres.

There is a huge potential for the pharma sector in days to come. With the government’s initiative, not only can the industry support the government in providing affordable and efficacious medicines it will also help to mark its presence in the global markets. The present growth projection for the pharma sector is from 10 to 12 per cent which can certainly be more than 15 per cent.There is a saying “Relationship always work when trust is bigger than doubt”. Therefore, the government has to work on trust with the industry to bring in phenomenal change, constructive and positive result in the overall interest of the nation.

Policy and financial initiatives are long over due
Harish Jain, Secretary, Karnataka Drugs & Pharmaceuticals Manufacturer’s Association

Pharmaceutical industry is the major contributor to the India’s economy. In hard times, pharma stands out with double digit growth. Pharma sector would like to be major contributor in terms of employment, knowledge, turnover and spreading soft power of India across the globe. However, there is a huge potential to accelerate growth and with right therapeutic dose of support from the Government, achieving more than 12 per cent year on year growth is distinct possibility. Area of focus should be end to end indigenous manufacture of APIs and speciality excipients, R&D specially innovative dosage forms (rather than NCEs), API process development, biologics and biosimilars, upgradation of MSMEs, ease of doing business.

Harish Jain, Secretary, Karnataka Drugs & Pharmaceuticals Manufacturer’s Association

Self sufficiency in API and speciality excipients remains a dream on paper. One cannot have a robust global formulation industry dependent largely on imported inputs. It is also a strategic risk in terms of health of more than 1300 million Indians. There has to be end to end (Not n-1 or n-2) indigenous manufacturing. Policy and financial initiatives are long over due. Industry is in crying need of rationalisation in environmental norms and compliance procedures for API Industry without compromising on effluent standards. There is a Bulk Drug Cluster scheme of Department of Pharmaceuticals with grants upto Rs 100 Crore for each cluster. However, this scheme can be availed only by State Implementing Agency (SIA). India requires a minimum of 15-20 clusters immediately. In addition to SIA, the scheme should be extended to SPVs floated by reputed industry associations and maximum extent budget allocation is expected. To encourage R&D including process development, clinical, BA/BE studies etc there is a long standing demand of the Industry to restore 200 per cent weighted deductions.

Also, currently API attracts GST of 18 per cent whereas, formulation attract sGST of 12 per cent which means there is inverted duty structure. This needs to be corrected by reducing API GST to 12 per cent to avoid accumulation of GST credit and clogging of precious working capital.

Upgradation of MSME to WHO-GMP norms by way of interest subvention on capital goods investment as well as investment on upgrading quality assurance systems is long overdue. Target should be to upgrade at least 1000 MSMEs within the next three years with interest subvention assistance of at least Rs 3 crores per MSME. Budgetary allocation needs to be done without any further

Industry-academic partnership is long overdue. All the public sector institutions like NIPER should have industry academic department headed by senior professor to facilitate partnership and create opportunity for industry, students and institutes. This has been global practice and all major research projects are incubated and commercialised by this partnership.

We recommend restoration of200 per cent depreciation for R&D expenses
S V Veerramani, Immediate Past President, IDMA, Chairman & Managing Director, Fourrts (India) Laboratories

We strongly recommend for restoration of 200 per cent depreciation for R&D expenses. At present, it has been reduced to 150 per cent and the pharma industry requires to roll back to 200 per cent considering the need for increased investments in R&D. We feel that if the government gives proper financial support to SMEs from technology upgradation fund for Pharma SMEs, then the pharma SMEs in India can graduate to the next level and can become exporters. Special package for bulk drug sector is required to reduce dependence on Chinese imports.