Time to give the right shots

The issue of drug prices may have received much attention from the Union Government over the last several years. But the same cannot be said of the pharmaceutical industry as a whole, especially during the all-important Budget exercise.

The Government’s increased focus on affordable medicine, for instance, has not translated into big-ticket healthcare initiatives or incentives for a sector oft referred to as a “sunrise” industry. Given the Narendra Modi Government’s stated interest in health, the forthcoming Budget is being keenly watched by pharmaceutical and biotech companies, hospitals and other public and private healthcare ventures.

Creation of healthcare infrastructure and education to generate skilled people to staff hospitals — these are two key areas the Budget should address, says healthcare veteran Vishal Bali, especially since India is under-served in terms of the number of patients-to-a-bed ratio.

The Government needs a policy for public-private partnerships in healthcare to grow infrastructure, says Bali, a former head at Fortis and Wockhardt hospital chains, who is now co-founder and Chairman of home healthcare company Medwell Ventures. Echoing similar thoughts, Novartis India-head Ranjit Shahani identifies investment in health infrastructure (including institution and capacity building) in addition to R&D as basic but critical requirements for quality improvement in healthcare.

Apart from trying to bridge the demand-supply gap , the Budget also needs to simplify those tax procedures that tend to keep out small healthcare institutions, says KPMG Director-Tax, Asmita D Souza. For instance, tax sops to 100-bed hospitals leave out several smaller 20-bed healthcare institutions, she points out.

In pharmaceutical circles, veterans expect the Budget to set right some anomalies, like the inverted tax structure. If the Government is keen on encouraging manufacturing, it should focus on rationalising tax on inputs that are at present higher than that on the finished goods, points out DG Shah of the Indian Pharmaceutical Alliance, a platform for large domestic drug companies.

The inverted excise duty structure has been troubling the pharmaceutical sector, with input ingredients subjected to a 12 per cent excise duty, while the finished medicine attracts a six per cent rate .

The Indian Drug Manufacturers’ Association, another pharmaceutical body representing small local drug companies, calls for scrapping Minimum Alternate Tax on special economic zones. It is discouraging that companies with no taxable income are expected to pay this tax, says an industry expert.

Tax sops on clinical research and regulatory filings, and registrations done overseas, are other long-standing demands from the industry, though representatives do not expect it to get addressed in this budget.

While Budgets in the past have removed import duties on some life-saving medicines, such as cancer drugs, industry will be listening in for broad-stroke policies on how the Government plans to make medicines more affordable and accessible.

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