Express Pharma

Review: Union Budget 2017

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The Union Budget evinces a bittersweet response from the pharma sector

‘It is unclear whether the allocations will adequately address current healthcare challenges.’

OPPI welcomes the commitment of the Government to – reduce infant and maternal mortality rates; eliminate certain diseases like TB, leprosy, measles and filaria and make structural reforms in medical practice and education. The Government’s intention of transforming 1.5 lakh health sub-centres is encouraging. We also appreciate the Government’s intent to amend the Drugs and Cosmetics Act which will be a step towards ensuring patient safety.

We had some expectations from the Union Budget 2017-18, given the Government’s past stated intentions of improving access to healthcare. Yesterday’s World Economic Forum said that that India’s public spending on healthcare is much lower than the global average. It is unclear whether the allocations will adequately address current healthcare challenges. We also hoped for some reform announcements on the regulatory front in the form of weighted deduction on R&D, incentives for patents, exemptions of certain duties and taxes, etc.

Kanchana TK, Director General, OPPI


‘The demands remained largely unaddressed, giving no specific reason to cheer for the sector as a whole in 2017–18.’

The life sciences sector had great expectations from the Budget not only from a fiscal incentives perspective but also from a regulatory angle; more so, given the government’s vision of making India one of the top-three pharmaceutical markets by 2020.

However, this year, too, no specific impetus was given to the sector. While the move to eradicate certain diseases; the proposal to set up two new AIIMS; additional post-graduate medical seats; proposed amendments in the Drugs and Cosmetics Rules; and new rules for medical devices are welcome, the Budget has not specifically addressed imminent challenges directly affecting the sector.

In order to stay competitive in the overseas market and given the uncertain global climate, it was expected that specific impetus or incentives would be given to innovation in the form of weighted deduction on R&D, incentives for patents, exemptions of certain duties and taxes, etc.

These demands remained largely unaddressed, giving no specific reason to cheer for the sector as a whole in 2017–18.

Utkarsh Palnitkar, National Head – Life Sciences practice, KPMG India


‘High allocation to rural sector has set the right tone’

Government’s objective is long term growth and it is trying to rationalise all issues for a good sustainable growth in years to come. High allocation to rural sector has set the right tone. Giving relief to smaller businesses and taxpayer was much needed to widen the tax net as well as incentivise businesses to come into the main stream of financial legitimacy. Initiatives on women empowerment, rural electrification, housing for all, more roads for villages and focus on employment generation will definitely strengthen the rural economy.

Rajiv Gandhi, CEO & MD, Hester Biosciences


Government’s impetus to reduce the borrowing cost and increase access to credit will surely help businesses to grow

Overall, the Union Budget 2017 that was presented earlier today is a step in the right direction. While it has focussed on economic reforms & liberalisation of the economy, it has also allocated funds to bring more irrigation, roads, electricity and sanitation to rural India. Even though the economic survey paints a sober picture for 16-17 primarily due to a weaker second half, the budget provides the necessary impetus to sustain GDP growth at over 7 per cent. Lowering tax on MSME’s is a welcome step that would provide a much needed fillip – by creation of jobs and putting more money in their pockets in all sectors including pharma. Government has shown its clear intent towards fast-tracking inflow of FDI, and the scrapping of FIPB is a notable step that would go a long way in supporting the objective of ease of doing business. Additionally government’s impetus to reduce the borrowing cost and increase access to credit will surely help businesses to grow. We see the biggest ever allocation to the infrastructure sector which would benefit all sectors, including the fast growing pharmas. The FM reiterates his commitment to keep current account deficit and fiscal deficit under control GST implementation as soon as possible.

Glenn Saldanha, Chairman and MD, Glenmark Pharma


The abolition of FIPB is a big move as it was an impediment to FDI

The Budget presented by the FM is a positive one, without being game changer. There is no strong thrust or focussed measures to bolster the healthcare sector, apart from a mention about improving rural health infrastructure with 1.5 lakh sub centres being upgraded to health and wellness centers and setting up of two more AIIMS. Some amendments have been proposed to the Drugs & Cosmetics act to provide a fillip for generic medicines but the details need to emerge on what exactly is being proposed. That said, one hoped for more decisive announcements to boost the sector, which did not happen.

The abolition of the Foreign Investments Promotion Board (FIPB) is a big move as it was an impediment to FDI. Initiating reforms have been talked about in this area to increase fund flows into the economy, so we will need to see how the new policy unfolds.

Political funding was addressed at last by capping cash donations. This is a long overdue step as it is impossible to tackle corruption without cleaning up at this level. The simultaneous introduction of electoral bonds is also a welcome move. Also, much awaited reforms in higher education have been set in motion which will provide access to quality education to students from across the sections.

Satish Reddy, Chairman, Dr Reddy’s Laboratories


Healthcare for ‘poor and underprivileged’ being one of the top themes of the government, is a positive sign for the industry

“The Union Budget 2017 was presented in the backdrop of huge aspirations of the healthcare industry as we strive to make healthcare accessible and affordable to each and everyone in the country. Therefore, healthcare for ‘poor and underprivileged’ being one of the top themes of the government, is a positive sign for the industry. The focus has been largely on digitisation across sectors. The launch of Digi Gaon and Aadhar based health cards is a huge step towards digital revolution in healthcare delivery ecosystem enhancing overall patient care and experience. Access to tertiary health care in India is currently facing a huge challenge due to shortage of doctors. The move to open AIIMS hospitals in Jharkhand and Gujarat, increase in PG medical seats, and impetus to tertiary care centres and specialist doctors will help in addressing the challenge related to availability of healthcare professionals in hospitals and bridge the demand supply gap. The plan to transform 1.5 lakh Health Sub Centres into Health and Wellness Centres is a welcome move which will play a role in decreasing the load on existing healthcare infrastructure and help in further evolution of primary care, prevention and screening, thus reducing the disease burden in the long run.

Furthermore, the government’s plan to eradicate diseases like leprosy and TB is an important step as these constitute major public health challenge that undermine social and economic development of a nation. This action plan will mean that there will be a significant increase in governmental spend on vaccination and medicinal therapy, hence the pharma players in this space would stand to gain with large scale revamp of the current government campaign on such life threatening diseases. The plan implementation will also help in further evolution of other emerging models of healthcare with more private players being interested in this space.

At QuintilesIMS, we capture close to 380 pharma companies who have a sales revenue of less than Rs 50 crore. The number of active pharma companies having a turnover below Rs 50 crores would be over two thousand. As per the current budget announcement, the corporate tax rate for MSMEs having revenues less than Rs 50 crore will be down to 25 per cent. Providing tax relief to such players will improve their bottom-line and growth in the face of stiff pricing competition and high share of voice from the large pharma companies with an army of sales reps and complete portfolio of products.”

Amit Mookim, GM, South Asia, QuintilesIMS


Khaitan & Co lauds government’s intent to regulate the price of medical devices

The Medical Council had recently amended its guidelines to encourage doctors to prescribe generic names of medicines. In the budget speech, it has been indicated that changes may also be introduced to the Drugs and Cosmetics Rules along similar lines. This will be a significant change if introduced and pharma companies will have to alter their marketing strategies

Bhavik Narsana, Partner, Khaitan


“The Honourable Finance Minister spoke about bringing medical devices into the price control net. The price control on stents last year met some industry resistance. Given medical devices have not been in price control before, industry reactions will be interesting

Ajay Bhargava, Partner, Khaitan


“Draft medical devices rules have been in vogue for quite some time already. It is encouraging to see that the Government will seek to introduce some regulations in the coming year

Anand Mehta, Partner, Khaitan

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