The Hindu Business Line : Pharma units seek duty sops for R&D

TO maintain and improve the competitiveness of the Indian pharmaceutical industry, the Government needs to consider abolishing customs duty on research and development (R&D) expenses and consumables, according to the FICCI Pharmaceutical Confidence Survey 2004.

Indian companies are increasingly investing in research and development and the average R&D expenditure of major Indian companies has increased to 5.35 per cent.

Apart from this, the respondents also suggested that clinical trials done outside the company and overseas should be exempted from income tax. Corporates also asked for inputs required for generic product development to be exempted from a levy of duties.

The respondents also felt that there was a need to enhance research facility for small and medium enterprises for product development. They were also keen on the quality of products being produced by the small-scale industries being regulated so as to build up the image of Indian manufacturers overseas.

Corporates suggested generic-friendly data exclusivity rules for India and pointed out that drugs worth an estimated $40 billion were going off patent by year 2005 and $70 billion going off patent by 2008. This, they felt, provided a big opportunity for Indian companies to manufacture and export generics.

The survey elicited response from 12 pharmaceutical companies with turnover ranging from Rs 4,000 crore to Rs 70 crore. A key finding of the survey was that nine out of the 12 respondents viewed opportunities in commodity generics. Another major finding was that there is a significant shift from investment in re-engineering of molecules to investment in New Chemical Entities and Novel Drug Development Systems.

Further, Indian companies are now concentrating more on their core competencies. These include low production costs, world-class quality products and low cost of innovation. Indian production costs are almost 50 per cent below those in the West.

The survey revealed that 11 out of 12 respondents are working towards a presence in the EU and the US markets and have included the regulated markets in their future growth plans.

Further, most of the Indian companies till now were concentrating on the anti-infectives segment. But now, the segments showing highest growth in the developed countries is the so called `lifestyle drugs' segment. As per the survey, 11 out of 12 of the companies were manufacturing drugs belonging to this category.

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