The Hindu Business Line : Budget breathes new life into pharmaceuticals sector

IT is being hailed as the "best budget" that the pharma industry has seen in the last few years — not just because it has been favourable to the industry, but more importantly, it has been kind to consumers.

With life-saving drugs being exempted from both excise and customs duty, the benefits would definitely be passed on to the consumers, opine top-brass of the pharma industry.

Mr Rajiv Gulati, Managing Director of Eli Lilly in India, told Business Line that more clinical trials and research-based investments would be brought into India by MNC-pharma companies, thanks to the Budget's waiver on clinical trial equipment. He said that the budget was balanced in its approach towards both domestic and foreign pharma companies. ``In clinical research, the finance Minister has waived customs as well as excise and so is the case with life-saving drugs. The net-result is that patients will gain, as these benefits would be passed on to the consumer.''

The Budget has benefited the country, as more research would now be done here and more funds would come in, as a result. Mr Gulati was also happy with the direction that the Budget took, in terms of ``health insurance, medical infrastructure and steps to take these facilities to the disadvantaged.''

Mr Ajay Vij, Vice-President (Pharmaceuticals), Dabur Pharmaceuticals, welcomed the excise exemptions on life-saving drugs, but pointed out that the scope of this list of drugs should have been widened. ``Increase in the overall limit for overseas investments, from 50 per cent of net worth to 100 per cent, through the automatic route is a favourable development for opening up subsidiaries abroad," he observed. "Customs duty reduction in import of medical equipment would, over a time span, improve the health facilities in the country and make treatment more affordable," he added.

Mr D.G.Shah of the Indian Pharmaceutical Alliance also felt that the Budget was balanced in its approach to both the domestic and MNC pharma companies.

Striking a different note, Ranbaxy's Senior Vice-President, Mr B.K. Raizada said the Budget had ``no impact'' on his company. ``We are an outward looking company and the Budget was silent on companies with operations in international markets and those who take their research abroad, in terms of filing patents in international markets. We should be treated on par with infotech companies for the investments on intellectual property in global markets, the income from which would be ploughed back in research in the domestic market.''

Further, he pointed out that the Budget was kind to MNCs doing business in India and affiliates of foreign companies, ``who are increasing importing products into the country and producing less here.'' Unhappy with the Budget for ``allowing access to the domestic market, while not encouraging outward looking countries'' he said : ``Regulatory costs in India are seen as expenditure, but income from export of R&D work is not exempted.''

Industry analysts point out that Novartis, with a pipeline of cancer-related and life-saving products, Eli Lilly, Astra Zeneca and GlaxoSmithKline are some of the companies that would benefit from the Budget. Novartis also manufactures Cyclosporine, another life-saving drug, which was singled out for excise duty exemption.

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