Industry & Economy
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Pharmaceuticals
Cos conducting clinical trials can now compete on prices
P.T. Jyothi Datta
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As service tax of 12.24% on new drugs is scrapped
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"The scrapping of service-tax will simplify procedures, besides saving time and manpower involved in sorting out the details"
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Mumbai
March 1
An application to do clinical trails in India is apparently reviewed by regulatory authorities almost every alternate day, says a representative of the domestic clinical trial industry, illustrating the opportunity in the segment.
And with Budget '07 removing clinical trials for new drugs from the service-tax net, contract research organisations (CRO), which conduct clinical research for drug companies, will be able to compete better from a pricing stand-point, he observes.
Though scrapping service-tax may not quite add to a CRO or drug company's topline, it certainly simplifies procedures, besides saving time and manpower involved in sorting out the details, says Dr Arun Bhatt, President of ClinInvent Research Pvt Ltd. ClinInvent is part of the Purnendu Chatterjee group.
Service tax looks simple on paper, but sometimes CROs ended up getting taxed twice, if they outsource some of the work they have taken on to a laboratory, for instance, he explains. With the service tax of 12.24 per cent being scrapped on new drugs, CROs and drug companies will benefit, he added.
The domestic clinical trial industry is estimated to be about $100 to $200 million, and accounts for about 1.5 per cent of the global clinical trial industry. The domestic clinical trial industry is projected to touch $1.5 to $2 billion by 2010, even as the global clinical trial segment expects to clock $25 billion by 2011, an industry representative said. And there are about 70 to 100 CROs in the country.
Dr Swati Piramal of drug-maker Nicholas Piramal said that clinical research is a major part of any research spending by a drug company. Two-third of the cost of drug development goes in clinical trials. Out of the $1 billion cost to develop a drug, about $700 million goes in development costs, she says. It is a knowledge sector and the budget proposal will stimulate more companies in the sector. Wellquest is the CRO from Nicholas Piramal.
Others involved in clinical trials include Quintiles, igate, Synchron, besides drug companies such as Ranbaxy, Glenmark and Zydus Cadila, who may do collaborative trials with other pharma companies, an analyst said.
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