Rating: 3.5-4 / 10
Though the life sciences sector is yet to see ‘radical reforms’, the Narendra Modi Government’s efforts to improve the overall business environment in India are likely to have ripple effects on the life sciences sector too. The life sciences sector has propelled India into global prominence and leadership without significant government support. However, it has far greater potential. To help achieve this, there needs to be greater stakeholder engagement in the healthcare and life sciences sectors for meaningful reforms and policy making.
Already, the maiden Budget of the Modi government has proposed to scale up the Bangalore and Faridabad biotech clusters and also expressed its intent to bring global leadership status to the International Centre for Genetic Engineering and Biotechnology. While these are steps in the right direction a lot still needs to be done.
Policies needed for three strategic areas
The life sciences sector in India is over-regulated, over-taxed, under-incentivised and under-invested. To make the industry globally competitive and to prime it for sustained high growth, policies are needed to address three strategic areas: manufacturing, innovation and entrepreneurship.
Suggestions for roadmap
The Government is serious about improving the ease of doing business in India through the simplification of laws and policies and introduction of self-certification and automatic approvals. I believe these measures will go a long way in boosting the life sciences industry. In addition, the Government needs to take the following steps:
- Support manufacturing: The Government should make low-interest loans available to the life sciences sector to support capital investment for upgrading and expanding manufacturing infrastructure.
- Incentivise R&D: The weighted tax deduction on R&D costs allowed to companies does not permit the inclusion of international patenting and overseas drug development expenses. This tax exemption should be allowed urgently.
- Take a rational approach to drug price controls: Drug price ceilings should be calculated based on an equitable formula which ensures like-to-like comparison and takes into account the quantum of investments.
- Boost exports: Pharma and Biotech SEZs should be allowed to choose the starting year of the five-year tax holiday based on obtaining required regulatory approvals. The Minimum Alternate Tax (MAT) on SEZs should be abolished.
- Revive clinical trials: The Government should intervene to revive the clinical trials industry. It should re-look at some of the recent changes brought in to strengthen the monitoring of clinical trials as irrational guidelines will scare away innovators from India and irretrievably hurt the country’s ability to partake in new drug development.
– Biocon
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