The Hindu Business Line : Regulatory framework should encourage pharma R&D: FICCI

LOW investments in innovative research, weak linkages between industry and academia, low medical expenditure, production of spurious and low quality drugs and shortage of medicines containing psychotropic substances are some of the major constraints being faced by the Indian pharmaceutical industry, said a report prepared by the Federation of Indian Chambers of Commerce and Industry of India (FICCI).

The FICCI report on Competitiveness of the Indian Pharmaceutical Industry in the New Product Patent Regime points out that the regulatory framework should be designed to encourage domestic industry to invest in R&D. It emphasises the need to liberalise the Drug Price Control Order (DPCO), which puts unrealistic ceilings on product prices and profitability and prevents pharma companies from generating investible surpluses.

It states that the lowering of tariff protection and the new MRP-based excise duty regime threatens the existence of many small-scale pharma units, especially in Andhra Pradesh and Maharashtra that were involved in contract manufacturing for the larger players.

The report has suggested extension of deduction of 150 per cent of R&D expenses to encourage companies to invest in R&D, augmentation of the allocation of Rs 150 crore by the Government for R&D to Rs 2,000 crore, a liberalised price control regime so that industry has surpluses for investment in cost effective technology and processes.

It has also suggested income tax exemption on clinical trials and contract research done outside the company and overseas and encouragement to setting up of USFDA-complaint plants by providing tax holidays for a specified period so that Indian companies can exploit the opportunity arising out of patented drugs and take up the marketing of generics in the developed countries like US.

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