‘To incentivise investment in R&D, particularly in healthcare and pharma sector several strategic inputs need to be provided’ – Dr Ajit Dangi, President & CEO, Danssen Consulting
The interim budget 2019 presented by the interim Finance Minister had one eye firmly on the forthcoming general election. While the budget has something for every one from farmers to middle class to Bollywood, it has managed to balance the populist tone with the fiscal prudence reasonably well.
We were hoping to get some fiscal incentives for the start ups and scrapping of the Angel tax , however, this did not happen. While the overall healthcare outlay has been increased by 16 per cent to Rs 54,302.50 crores, it should have been increased in line with the target of 2.5 per cent of GDP as being proposed for the last several years. Also, GST simplification to just two slabs as assured should have been implemented.
Inspite of India being world’s fastest growing economy,our investment in R&D particularly in Science & Technology has stagnated at around 0.65 per cent of GDP for over two decades. To incentivise investment in R&D, particularly in healthcare and pharma sector several strategic inputs need to be provided.
One positive anouncement is the proposed formation of National Centre for Artficial Intelligence. With the US and China leading the AI race, this will go a long way for India to remain competitive in technology sector. Hopefully, the next full budget will address more such strategically important issues.
It is time industry expectations and the government focus are aligned – Anil Khanna, Partner, WisdomSmith
It’s often said that the expectations are like fine pottery. Harder you hold onto them, more likely they will crack! Same can be said about the pharma industry response to the budget over the years. A brief look at the last three budgets of this government (including the latest interim budget), a similar thread emerges – government announce measures and policy decisions for overall healthcare (including pharma), and every time industry feels disappointed. Their usual response is – expectations weren’t fulfilled!
Let’s look at some of the key measures government announced over last three budgets for the healthcare sector: 2019 interim budget: A vision statement of ‘healthy India’ by 2030, by building a distress free, functional and comprehensive healthcare and wellness system. In addition, government announced setting up of a new AIIMS at Haryana (taking total number of AIIMS to 22), a Centre of Excellence for Artificial Intelligence (with focus on healthcare) and increasing the outlay for Ayushman Bharat Scheme.
2018 budget: Launch of Ayushman Bharat Scheme (health insurance of up to Rs 5 lakhs for 10 crore vulnerable families), creation of about 150,000 health and wellness centres, bring quality healthcare closer to the people with an outlay of Rs 1200 crores, upgrading 24 district hospitals to medical colleges and hospitals.
2017 budget: Rs 10,000 crores increase in ministry of health and family welfare outlay, increase in allocation for schemes related to women and child welfare, across all ministries by Rs 24,000 crore, changes to D&C Act to make medicines affordable (by bringing more into price control), reduction in weighted tax deduction to 150 per cent under section 35D, from 200 per cent for R&D budgets and other capital expenditure.
On the other hand, pharma industry is also consistent in its expectations, but focusses primarily on demanding and expecting tax incentives, such as for R&D (justifiably so), tax incentive on preventive health check-up, reduction in corporate tax etc. Since, these specific measures aren’t met, hence always a ‘sense of disappointment’ and unfulfilled expectations.
If we see, there is a consistent thread in the government focus – overall healthcare, investing in creating/strengthening healthcare infrastructure, thus benefiting broader stakeholders, including the pharma industry. It is time industry expectations and the government focus are aligned. Industry needs to take a broader view of the ground realities. Measures taken by the government do benefit, directly and in-directly, the pharma industry as well. Whether its opening more AIIMS, Ayushaman Scheme, or opening 150,000 wellness centres, they all benefits the pharma industry sustainably. It’s not a zero sum game.
Interest subvention to MSMEs is a game changer and this will give scope to better the bottom line margins – Bhavin Mehta, Director, Kilitch Drugs
The overall budget is very encouraging for the businesses and the middle-class welfare. Interest subvention to MSMEs is a game changer and this will give scope to better the bottom line margins by which M SMEs can invest for upgradations and capacity expansion resulting in more capital expenditures and employment generation, budget is serendipity of long-time demand by MSME for reduction of interest burden.
The budget highlighted ‘Healthy India’ as one of the ten dimensions of the government’s 2030 vision which clearly showcases its efforts of continuous focus on the overall healthcare policy of the country. The ongoing implementation of the Ayushman Bharat scheme will bring in quality & affordable healthcare to the rural masses of the country. Increase in basic exemption of income tax up to ` 5 lakhs will benefit millions of middle-class income levels, they would also now be able to save some surplus by filing IT returns and reaping the benefits of tax savings.
Plans of universal healthcare coverage by 2030 augurs well for the pharma sector in the longer run – Gaurav Jain, Vice President – Corporate Ratings, ICRA
The pharma sector will benefit from cascading effect of scale up in schemes such as Ayushman Bharat programme targeting health coverage for 50 crore citizens. The insurance scheme has benefitted 10 lakh people in last one year and the coverage/beneficiaries are expected to scale up going forward. This along with plans of universal healthcare coverage by 2030 augurs well for the pharma sector in the longer run. Higher disposable income owing to tax rebates will allow higher spending on pharma in the near term.