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Pharmaceuticals
Pharma and biotech firms cheer tax deduction on outsourced R&D
Straddling both agriculture and pharmaceuticals as it does, the biotech industry indirectly benefits from some of the relief announced for the two sectors
Our Bureaus
Feb. 29 Ms Kiran Mazumdar-Shaw, CMD of Biocon Ltd, said India’s emerging role as the preferred destination for drug development coupled with an increasing need to bring down drug prices has been the key factor in this yea
r’s Budget sops.
The single most important tax benefit announced for the sector, according to her, is the 125 per cent weighted average tax deduction on outsourced R&D, which, she said, “sends a strong signal of the potential that discovery research holds for the Indian pharma and biotech industry.
“The healthcare sector is a major beneficiary of Budget 2008. The sops have come as a pleasant surprise and have more than met industry expectations.” She gave a score of nine out of ten for the proposals on pharmaceuticals and healthcare – one of the four pillars of the economy along with agriculture, education and infrastructure.
The 8 per cent reduction in export duties along with export duty exemption for indigenous life saving drugs and 5 per cent customs duty reduction for imported LSDs will certainly reduce drug prices. This is a better way to address healthcare costs rather than drug price control.”
BIOTECH
The biotechnology sector did not get a special mention or direct relief, but has found enough reasons to smile. Straddling both agriculture and pharmaceuticals as it does, the biotech industry indirectly benefits from some of the relief announced for the two sectors, according to ABLE – the Association for Biotechnology-Led Enterprises.
The large allocations to the agriculture sector and exemptions in customs and excise duty for the pharma sector also accrue to the biotech sector, it said.
According to Mr Shrikumar Suryanarayan, Director-General, ABLE, “The reduction in the CENVAT rates that will provide a boost to all manufacturing activities will also have a telling effect on manufacturing of biotech products. In particular, the halving of the excise duty from 16 per cent is very welcome.”
The pharma biotech sector would see an increased use of biotech products such as vaccines, as a direct gain from the overall 15 per cent increase in the health outlay.
Dr K.K Narayanan, ABLE President and Managing Director of agribiotech company MetaHelix, said, “The weighed average deduction of 150 per cent on R&D that has been extended to seed production activities will provide relief to the seed companies.”
Outsourcing of research, he said, gets a short in the arm and should increase collaboration and value generation for the biotechnology sector.
ABLE said the large outlay for education and skill-building through scholarships and the INSPIRE scheme would also build relevant capabilities that would be needed in future.
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