Financial Daily from THE HINDU group of publications
Tuesday, Mar 01, 2005
Industry & Economy
Little to spur pharma industry
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."
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