Pharma Budget 2022

The budget will expand upon the PLI, conspiring and empowering the development of delicate APIs : Sajiv Nath, MD, Yokogawa India

Amid the continuous COVID-19 pandemic and developing immunisation prerequisites universally, the Indian pharma and clinical gadgets area that assumed a crucial part, is hoping to fortify the association with the public authority to support the force in 2022.

Incentives such as the extension of 15 per cent tax rate u/s 115BAB for expansion by the existing companies, capital gains exemption on start-up investments, depreciation on goodwill on account of acquisition should be offered to the sector in the upcoming budget.

Crediting the government’s Aatmanirbhar Bharat drive for the area’s huge force, the master anticipated that the budget 2022 will expand upon the Production Linked Incentive (PLI), conspiring and empowering the development of delicate APIs, in addition to other things.

The pharma and clinical gadgets area has acquired a considerable force attributable to the public support for Aatmanirbhar Bharat drive. The financial plan is relied upon to expand on the PLI plots and energise proceeded with interests in the limit extension of delicate APIs, complex excipients, drug intermediates, biopharmaceuticals and clinical gadgets. Interest appropriations, lower GST on clinical preliminaries and examination exercises, and rebuilding of weighted duty allowance u/s 35(2AB) can be considered by the public authority to energise development and R&D.

Healthcare sector will look for higher allocation towards Production Linked Incentive (PLI) schemes : Mahendra Patel, Managing Director, Lincoln Pharmaceuticals

The government is required to stimulate growth and boost investment with confidence from both the public and private sectors in the Union Budget 2022. Special emphasis is required for job creation, lifting consumption and sentiments, and building infrastructure in priority sectors – education, health, rural and MSME. With no social security mechanism for people at large and an inadequate public infrastructure, the middle-class taxpayers were affected the worst, and have high hopes from the government.

Healthcare sector will look for higher allocation towards Production Linked Incentive (PLI) schemes to encourage capacity expansion of sensitive APIs, complex excipients, drug intermediates, etc. Interest subsidies and restoration of weighted tax deduction u/s 35(2AB) to encourage innovation and R&D are some of the key measures required for the sector. We need to create an ecosystem to encourage innovation and research in the country which is ignored to an extent. COVID taught important lessons of self-reliance and innovation in the pharma sector, especially in the APIs to reduce dependence on China.

Funds allocated for healthcare as a percentage of GDP at 1.5 per cent continue to be lower compared to the most developing nations. Keeping in mind the current pandemic situation, it is the need of the hour for the government to increase the allocation towards health infrastructure across the entire infrastructure chain, specifically in tier-II and tier-III cities and immunisation. Higher allocation to the sector is also necessary to enable the government to achieve its target to spend 2.5 per cent of GDP on healthcare by 2025.

The government should enable our R&D-driven pharma companies to compete with top global innovators : Saransh Chaudhary, President, Global Critical Care, Venus Remedies, and CEO, Venus Medicine Research Centre (VMRC)

All the material procured by pharma firms for R&D purposes should be exempted from customs duty and GST. While as per the existing DSIR notifications, there is already provision for partial waivers and/or reduction of custom duty and GST on import of certain items, a complete waiver would further help in setting up a world-class R&D infrastructure. The government should enable our R&D-driven pharma companies to compete with top global innovators and secure a significant market share by offering interest subsidies and lower GST on clinical trials and research activities, giving tax concessions to exporters and restoring weighted tax deduction under Section 35 (2AB).

The Finance Minister should also earmark funds to strengthen the pharma supply chain and distribution infrastructure and integrate it with the latest digital technologies. This will not only ensure improved access and uninterrupted deliveries in real time, but will also lead to cost reduction and quality improvement, thus making Indian pharma companies far more competitive.

It would be important to incentivise investments in R&D: Vani Manja, Managing Director, Boehringer Ingelheim India

The focus on healthcare has been at unprecedented levels in recent years when it comes to infrastructure development and capability building in India. The increased allocation of funds in last year’s budget alongside the recent commitment of Rs 64,000 crores towards healthcare over the next five years is a testament to the government’s focus on strengthening the health infrastructure in the country. Hopefully, this will be reflected in the upcoming budget as well.

What will be critical to ensure is not only increased expenditure towards healthcare, but also a well-planned and balanced allocation coupled with a strong execution roadmap that addresses areas beyond COVID-19 to secure long-term sustainable impact. Specifically, the burden on the healthcare infrastructure caused by the increasing burden of NCDs should continue to be considered. With the learnings of the past several months, the broader topic of One Health calls for concerted attention and investments, as it recognises that the health and well-being of human beings, animals and the environment are deeply interlinked. This requires a collaborative and multi-disciplinary approach involving multiple stakeholders to drive desired health outcomes.

It would also be important to incentivise investments in Research and Development (R&D) for India to become an attractive innovation hub and maximise access to innovation for patients in India.

We expect the budget to help research-based innovative start-ups on tax burden: Maharukh Rustomjee Managing Partner, AmaterasuLifesciences 

As a research-based pharma startup, we have three basic requests expectations from the upcoming budget.

• Tax Burden: Smaller pharmaceutical research-based startups, who outsource scientific work heavily, rely on Contract Research Organizations (CROs) and utilise the funds otherwise invested in infrastructure, for actual technology development, while also generating revenue and employment for the CROs. However, we are subjected to a heavier tax burden than the larger pharma companies with in-house research facilities, who enjoy several tax benefits for their approved R&D laboratories. Apart from this, startups and SMEs also end up paying 18 per cent GST on all CROs and similar services which stretches our cash flow and creates liquidity challenges. Our first expectation from the budget would be to somehow help research-based innovative start-ups on this tax burden.
• Funding Opportunities: With the pandemic, most funding on research in non-COVID projects was diverted to COVID projects, and rightfully so, but the other ongoing research on a plethora of areas has suffered neglect. Additionally, research and innovation-based startups and SMEs like us, depend on part funding or aid from government agencies for their projects instead of private equity. While we do receive research funding opportunities from public sector institutions, the long-drawn processes, lack of transparency/no mechanism for clarifying the objections and delayed release of funds for approved projects creates its own challenges as time to market gets compromised. Simplifying this process through policy intervention or adding a mechanism for clarifications, accelerating the approval and release of funding, will motivate innovators to work closely with government agencies, creating successful private-public partnership models.
• Marketing support: Lastly, while investments in R&D usually get incentivised, marketing of their innovative projects do not get incentivised. A mechanism to support/incentivise marketing spends on innovation can be a much welcome step as it will eventually help to fructify the entire research process and bring the innovation closer to the end consumer, thus benefitting masses.

We look forward to a budget that will help in fuelling innovation and advancing the Indian pharmaceutical industry: Sudarshan Secretary General, Indian Pharmaceutical Alliance (IPA)

For the knowledge-driven pharmaceutical industry, innovation and R&D is critical. This will help in meeting unmet patient needs in an affordable manner. We are looking forward to the budget that will help in fuelling innovation and advancing the Indian pharmaceutical industry from “Make in India” to “Discover and Make in India.”

The government should give a fillip to nutraceutical industry in this year’s budget: Aman Puri, Founder, Steadfast Nutrition

There should be an increased budgetary allocation to the pharmaceuticals industry to remove its current dependence on China and other countries for imports of Active Pharmaceutical Ingredients (APIs).  Lakh of crores of investment is required, and not the current amount of hundred crores. COVID-19 has highlighted the role of nutraceuticals- particularly immunity boosters- as the first line of defence against the disease. Vitamin D, fish oil, multivitamins and zinc supplements have been prescribed by doctors to COVID patients and survivors. The government should give a further fillip to this industry in this year’s budget to make India Aatmanirbhar in the manufacturing of nutritional supplements and also an exporter to the world. Moreover, only 70 per cent of India’s population takes less than half the daily recommended dietary allowance of micronutrients. To address the prevalent anaemia and micronutrient deficiency in the country, the government should announce public-private partnerships with the nutraceutical industry to revolutionise the Indian health and wellness market.

It is expected that the government would increase export incentives: Anuradha Gupta, Director, Brickwork Ratings

Additional funds are expected to be allocated towards the COVID-19 vaccination programmes, including the booster dose and vaccination for children. It is also expected that the government would increase export incentives as a step towards achieving the goal of becoming the pharmacy market of the world. Although the expectations on tax reforms in the pharmaceutical sector remained unmet in the last budget, industry expectations on lower GST rates for critical life-saving drugs and devices under the zero tax slab and tax benefits on R&D expenditure in key raw materials and new drug discovery (including for new COVID variants) still continue for the upcoming budget and are considered crucial to boost local manufacturing and achieve self-sufficiency.

Providing fiscal and non-fiscal incentives for R&D expenses will support higher investments in developing new drugs : Deepak Jotwani, Assistant Vice President, Sector Head — Corporate Ratings, ICRA

Last year, the Government of India had announced a Production-Linked Incentive (PLI) scheme of Rs 150 billion for API manufacturers, covering around 53 APIs, which are critical in terms of import dependence on China. Similar incentives for other import-dependent APIs will boost local manufacturing and reduce dependence on imports.

Medicines are taxed under four categories—nil, five per cent, 12 per cent and 18 per cent. Certain life-saving medicines are taxed at a nil rate, while the rest are taxed at five per cent. Most medicines fall under the 12 per cent GST slab. Last year, the GoI had deducted the GST rate on various COVID-19 treatment medicines and also brought down the GST rate for certain cancer treatment medicines and exempted certain other life-saving medicines. Similar incremental changes will increase affordability and higher consumption of such drugs leading to higher demand.

Being research-intensive, the pharma sector incurs a significant amount on R&D. Providing fiscal (higher tax deductions) and non-fiscal incentives for R&D expenses will support higher investments in developing new drugs. Investments in novel and specialty drugs are subject to a higher risk of failure leading to risk averseness. Higher tax incentives for R&D spends will incentivise Indian players to spend more, thereby providing impetus to newer research initiatives.”

Greater investment across all the segments will encourage organisations to expand their capacities : V Ashok, Group, CFO, ACG

As the sector is on its way recovering from the setback of the pandemic, greater investment across all the segments will encourage organisations to expand their capacities. The PLI scheme launched by the Centre in 2021 proved to be beneficial for the sector and the government should look at extending the PLI scheme to encourage further investments post-COVID that would provide support to Micro, Small and Medium Enterprises (MSMEs). Bringing in new investments, incentivising and supporting the existing organisations with forward-looking policies, deduction in duties and reducing GST will bring down the overall cost of healthcare services which will benefit a large section of people in the country and encourage organisations to invest more in R&D.

Considering India is the largest exporter of pharma products, the government may look at providing appropriate RoDTEP rates to pharma products exported by the industry to encourage drug exports. The pandemic has paved the pathway for India to become a global pharma hub by 2025, it is the time to sustain the momentum with greater investments, industry-friendly policies and strengthen the digital health ecosystem in India.

The government needs to consider tax incentives to attract innovation : Nikkhil K Masurkar, Executive Director, ENTOD Pharmaceuticals

The Union Budget 2022 is expected to build on the Production Linked Incentive (PLI) schemes and encourage continued investments in capacity expansion of sensitive APIs, drug intermediates, complex excipients, biopharmaceuticals and medical devices. While the draft R&D policy focusses on creating an ecosystem for research and innovation, certain tax incentives for the investment in ‘R&D-focussed funds,’ set up for R&D-based activities, could be introduced. India should participate in the innovation area at a global level. Along with a scheme similar to the PLI, the government needs to consider tax incentives to attract innovation. Interaction with industry and global players can help India’s pharmaceutical sector to move from a generic manufacturer to an innovator developer and manufacturer for the world. Apart from that, technology/digital transformation is another key area of focus. In fact, it would be the building block for the much-expected universal healthcare in India. Currently, GST on drugs is taxed under four categories – nil, five per cent, 12 per cent and 18 per cent. While a few life-saving drugs are taxed at nil rates, some are taxed at five per cent and the majority fall under the 12 per cent GST slab. Extensions of a tax deduction on product development and R&D are some of the other demands of the pharmaceutical sector. The industry also seeks a 150 per cent deduction in tax on in-house R&D.”

We would welcome measures to boost private-sector R&D in biotechnology segment : Dr Surendra K Chikara, Founder & CEO, Bione

In the 2022 budget, we feel that the government should move positively to recognize the important role genetic testing, including DTC genetic testing, can play in preventive healthcare. We would welcome any measures to boost private-sector R&D in the biotechnology segment in the manner it rightly deserves. This will go a long way towards making quality preventive healthcare affordable.

India needs to build a vibrant ecosystem to emerge as an innovation hub in generics: Poornachandra Tejasvi, Senior Director, Emerging Markets India, Informa Pharma Intelligence

India should continue to build on public health programmes and provide further momentum to its COVID-19 vaccination effort. Higher public spending on healthcare is critical to reduce out-of-pocket healthcare expenditures; healthcare allocation as a percentage of GDP needs to be bolstered sharply. The previous budget referred to plans for critical initiatives under the Aatma Nirbhar Swasth Bharat Yojana including setting up mobile hospitals, a national institution for “One Health,” nine Bio-Safety Level III laboratories and four regional National Institutes for Virology. The pandemic has clearly showed these efforts/areas need further acceleration.

In addition, if India wants to emerge as an innovation hub moving beyond its prowess in the generics space, it needs to build a vibrant ecosystem. Prime Minister Narendra Modi’s clarion call at a recent industry summit was: Ideate in India, Innovate in India, Make in India and Make for the World. Budgetary impetus to develop the innovation ecosystem, support for industry’s R&D efforts whether by way of tax breaks, further support to the National Research Foundation, other incentives to life science start-ups in cutting-edge areas such as cell and gene therapy are all areas that could do with more attention.

Budget should focus on strengthening and promoting preventive healthcare services : Sanjaya Mariwala, Executive Chairman and Managing Director, OmniActive Health Technologies, and Founder President, Association of Herbal and Nutraceuticals Manufacturers of India (AHNMI)

As we are preparing to fight the third wave and further strengthen the health of the nation, 2022 budget should focus on strengthening and substantially promoting the preventive healthcare services. Young India is highly focussed on preventive care and overall well-being. Rising awareness has significantly added to the demand for dietary supplements and other nutra products. We urge the government to look at the socio-economic benefits that the nutraceutical sector offers and extend its support for the sector. Three things, if rolled out immediately, will help in enhancing the nutritional index of the population, and, the same time, expand exports manifold.

• PLI scheme for the nutraceutical sector: There is a need to focus on building an agri-supply chain, robust research and development of infrastructure and encourage innovation. This is where the PLI scheme can contribute monetarily and non-monetarily at all levels of research, technology and manufacturing.
• Promotive taxation: As compared to the pharma sector, nutra products are taxed higher. We need to look at giving equal importance to the nutraceutical sector and bring more progressive taxations in line with the pharma products. Currently, pharma products are taxed between five to 12 per cent, while nutra products are taxed at 18 per cent. The pandemic has proven that it is people’s behaviour and immunity system that will determine the course of the pandemic. A report by Global Wellness Economy identified an upsurge in immunity-focussed food consumption and supplement use due to COVID-19. For a healthy nation, it is important to promote nutra products and pricing will play a crucial role in the consumption habits given the purchasing power of a larger population.
• Including corporates under NMPB scheme: The National Medicinal Plants Board (NMPB), along with AYUSH and herbal industry bodies, are working towards promoting medicinal plant cultivation. Corporates and industry players should also be included as part of the scheme to encourage backward and vertical integration. This will also ensure higher cultivation by the industry players to facilitate clinical research.

There is a need to create a department of nutraceuticals and dietary supplements : Amit Srivastava, Chief Catalyst, Nutrify Today

“There is a need to create a department of nutraceuticals and dietary supplements along with HSN codes to have a systematic classification of goods. The government needs to provide aid of Rs 100 crore incubation fund. This will provide growth impetus to the sector. Formulation of Production Linked Incentive (PLI) scheme is something that the sector is desperately looking out for in order to become more robust and contribute extensively towards the development of the country’s economy. The utmost important part that the government can do to help the sector flourish is by creating a department for the nutra sector under the Ministry of Health and Family Welfare.”