Financial Daily from THE HINDU group of publications
Tuesday, Mar 01, 2005

Port Info

Group Sites

Industry & Economy - Pharmaceuticals

Little to spur pharma industry

Our Bureau

Mumbai , Feb. 28

`SWEET nothings' is how the pharmaceutical industry describes the segment-specific announcements made this Budget.

"It is just lip service, there is nothing that will spur growth in the industry. Despite being an essential commodity, excise duty remains at 16 per cent, along with cakes and pastries! For how many years will they keep calling us the sunrise industry? Another committee has been set up on the abatement-issue, which will add another bureaucratic layer, " says Mr Daara Patel, Secretary General, the Indian Drug Manufacturers' Association (IDMA).

IDMA, however, is happy with the increase in exemption limit for the small-scale sector.

"We were hoping that patents filed abroad or royalty payments received by companies on their research would be treated as research and development (R&D) expense. The extension of 150 per cent weighted deduction benefit on in-house R&D is welcome," said Dr Swati Piramal, Director of Strategic Alliances, Nicholas Piramal Industries Ltd.

Mr Habil Khorakiwala, Chairman, Wockhardt Ltd: The Finance Minister, Mr P. Chidambaram, has announced a slew of measures that will help the Indian industry and agriculture become globally competitive.

I would have expected a similar treatment for the pharmaceutical industry, which is at an inflection point as India has joined the global patent regime. Unfortunately, there is no bold initiative to promote pharmaceutical R&D in this Budget except for the welcome continuance of existing benefits.

Our Hyderabad Bureau adds: Mr Satish Reddy, Chief Operating Officer of Dr Reddy's Laboratories:

From the pharmaceutical industry point of view, it is an average Budget. There are no definite proposals for the industry. There has been a mention of creating a policy framework to encourage R&D. But we will have to wait and see if this intent really translates into definite action.

The only specific benefit is the extension of weighted deduction on R&D by two years from 2005 to 2007.

Our Ahmedabad Bureau adds: Mr Pankaj R Patel, Chairman and Managing Director, Zydus Cadila Healthcare Ltd: The announcement of a long-term policy for pharma and biotechnology sectors is a welcome move and certainly a step in the right direction. The specific announcements that would help the industry: Weighted deduction on R&D expenditure extended till 2007; Increase in the corpus of Rs 150-crore Pharmaceutical Development Fund.

Our New Delhi bureau adds: Mr Ramesh L. Adige, Director, Ranbaxy Laboratories Ltd, said the section of the Income Tax Act dealing with tax holiday on R&D units has been extended for another two years. "However, in the pharmaceuticals business, income becomes realisable, only after 10-12 years of R&D work. So, when the FM mentioned that he was providing a stable policy environment for pharma and biotech, this is not visible."

Dr Krishna M. Ella, CMD, Bharat Biotech, said the Budget will encourage entrepreneurial endeavours in the biotech sector, given the proposal to beef up the R&D fund. "This move will help new entrants, but not existing biotech players."

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Auto sector disappointed

Indirect momentum
Stimulus for economy, hopes for the poor
Law soon to allow banks to issue pref shares
Tax savings: Choices galore
FIIs can submit collateral for derivatives
Equity-linked schemes to lose lustre
`No concrete step to hike FDI limit' — Insurers welcome I-T changes
Bankers welcome nod for preference shares, seek clarity
Outlay up 29 pc
Fuel cess for road development up by 50 paise per litre
Centre's market borrowings may rise 68 pc next fiscal
The big picture: Social sector thrust
Corporate income-tax — A mix of lower tax shelters & rates
Petro-products and services — Rates cut, coverage expanded
Domestic airlines flying abroad need not pay ATF tax
The right ring
Alignment of tariffs welcome
More workload for taxman
AMCs gearing up for gold funds
108 SSI items likely to be dereserved
A level playing field for MFs
Gold funds: A new investment avenue
Good for housing sector, says Mistry
Emphasis on infrastructure projects
Budget estimates for 2005-06
Demand-led growth: End of incentive mindset
Service tax net widens — Small players exempt
Backward Regions Grant Fund
Bloom time for floriculture sector
A few things to cheer for plantations
21% tax revenue growth target not unrealistic: Chidambaram
Businesslike, he had them all ears
Good news on the whole
Reprieve for domestic aviation
A survival guide to PC-speak
Local PC makers fear CVD burden
Telecom: Customs relief diluted
Gain for cos with lower depreciation charges
Time to rejoice for insurance sector
Moods swing for B-day brokers
Govt borrowings may hit bonds
I commend...
Experts see red over banking cash transaction tax
While bosses fail to see the big idea, bourses take off
Budget favourable to NCMP: Montek
`A progressive Budget'
No effort to bring down deficit: S&P
Solid, for now
Mixed reaction from cement cos
Duty on clinker goes up
Slew of positives
Excise duty: Cess on petrol & cigarettes
Customs tariff: Lower peak rate
Duty on molasses to cost mills extra Rs 200 crore
Excise duty on molasses `retrograde'
Excise duty on refined oils, vanaspati goes
Fertiliser subsidy hiked to Rs 16,254 cr
Mumbai set for makeover, to become financial hub
Shot in arm for infrastructure
Cracked down the middle
Customs duty on petrochem products cut
... but product prices to stay flat
A mixed measure
Customs, excise duty on crude, petro products cut
Customs duty cut on pharma equipment
Little to spur pharma industry
No shot in the arm
Not a strong enough dose
Rural electrification gets a boost
`Rural power demand will go up'
Import duty on stainless steel, alloy cut; excise duty raised
Making the right noises
Sops for textiles and sugar
Special focus on textile sector
Intricately woven
On a bounce
Cut in excise duty to give fillip to tyre industry
`Tyres will be more affordable'
Paying more for the pint
Cess for health
On fast track
Consumer goods prices may stay put
Excise cut on ACs may not really soothe
Branded baubles to be dearer
Excise levy angers jewellery makers
Real estate sector cries foul
Stealing the show
Positive charge
`No impact on prices of non-ferrous metals'
Cautious optimism among industry captains
Cess on pan, tobacco products to fund rural health mission
Coat of cheer
Disinvestment — going off at a tangent
A case for more FDI
At the heart of a tax on the `fringe'
A recast of personal taxation
Fringe Benefit Tax
More in your purse for the nonce
Personal income-tax structure overhauled — Advantage lower, middle income groups
Cash withdrawals will leave a trail
`Tax on cash withdrawals an anti-evasion step'
Budget and you

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line