The Hindu Business Line : Plea to keep drug prices affordable in Budget

IT will be a fine balance that the forthcoming Budget will seek to strike between keeping medicine prices affordable, even as the pharmaceutical industry is spurred to become more competitive.

Echoing the United Progressive Alliance (UPA) Government's mantra of putting a human face to its economic agenda - the Union Chemicals and Fertiliser (C&F) Ministry's recommendations for this Budget seek to keep medicine prices within the reach of the proverbial common man.

The apex Ministry governing the pharma industry has held that excise duty should not be at the highest rate, a senior ministry official told Business Line. The Ministry has also communicated to the Union Finance Ministry, the need for reduced customs tariffs particularly for drugs in key therapeutic areas.

Excise duty currently stands at 16 per cent and the pharma industry is hoping that it would be halved this year.

Meanwhile, the drug industry's plea on getting tax exemptions on payments received in consideration for any intellectual property rights, such as invention, patent, design, trademark etc. has been endorsed by the C&F Ministry.

The Ministry has also sought an extension of the benefit of 150 per cent weighted deduction on investments made in land and building, expenditure incurred for obtaining regulatory approvals in the overseas markets and expenditure incurred on filing of patents abroad.

The Budget exercise has bypassed the drugs and pharma industry, twice over and this time around the pharma industry is hopeful that a definitive thrust is given to bolster the estimated Rs 30,000-crore pharma industry.

With exports being a key growth area for domestic pharma companies, the industry has asked for export-oriented units (EOU) be on par with Special Economic Zones (SEZ). The rationale behind this being that creation and approval of a pharmaceutical manufacturing facility for exports to the United States and the European Union takes close to seven years.

"It is not easy to establish a new manufacturing facility in dedicated export zones like SEZ to cater to the regulated markets. Pharmaceutical companies have already established EOUs. But they do not enjoy the same benefits that the SEZ units do. Since the role of these units is similar to that of the SEZ units, it will be logical to extend similar benefits to EOUs also," industry representations said.

Simplification of administrative procedures and exemptions from payment of service tax for services provided to these units are some benefits that would flow from this initiative.

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