Pharma sector wants govt focus on R&D

Various pharmaceutical associations have urged the government to provide an impetus to research and development in the coming Budget.

In their pre-Budget memoranda, the associations have also sought special benefits in special economic zones and a relaxation in transfer pricing norms, besides a reduction in the tax burden on manufacturers.

Indian Pharmaceutical Association (IPA) has said that all income earned through licence fees, royalty and milestone payments from intellectual property, should be treated at par with income from export of goods.

The body, which represents the interests of big Indian pharma companies like Ranbaxy, Sun Pharma, Dr Reddy's and Wockhardt, wants such income to be exempted from income tax for 10 years.

The Organisation of Pharmaceutical Companies (OPPI), representing multinational innovator firms has also lamented the lack of any specified tax holiday for R&D-focused units.

Calling pharma discovery research a "lengthy, risky and expensive proposition", OPPI's memorandum has asked for clinical trials by non-manufacturing firms to be eligible for the 150 per cent weighted deduction and the benefits to be extended till 2017.

This suggestion has found favour with IPA as well which wants the expenditure incurred on patents filings, product registration overseas and on facilities dedicated to R&D to qualify for weighted reduction calculations.

Indian Drug Manufacturers' Association (IDMA) has asked for an increase in the exemption limit for the small-scale industry to Rs 4 crore, from Rs 1 crore now.

The industry body of thousands of small- and medium-scale manufacturers also wants to see excise duty reduced to half on ayurvedic drugs as well, not just the allopathic ones.

The MNC lobby has also asked for special benefits for the pharma sector in SEZs by lowering the investment level criterion. It wants the present system of treating "'transfer pricing" as concealment of income and attracting harsh penalties of up to 300 per cent to change.

"Transfer pricing", which its memorandum deems as double taxation, is the value-creation in an Indian arm of a multinational that it repatriates to its parent organisation.

Among some other suggestions on the wishlist are removal physicians' samples from coming under fringe benefit tax. IDMA has also called for excise duty exemption of control samples which are held back from a medicine batch to be tested in case of a complaint.