 "Need a more industry-friendly approach to enthuse pharma sector: IDMA")
It is high time the government takes serious note of the issues and concerns of the Indian pharma industry. Our pharma industry has been providing efficacious affordable quality medicines and growing despite dismal government support as well as international pressures. A more industry-friendly approach would enthuse our pharma industry to provide almost all our people access to quality affordable medicines at a faster pace.
There is a fundamental shift in the business model of Indian pharma companies from business driven research to research driven business. Considering the long term benefits of R&D to the economy at large, all excisable goods used for R&D purposes should be exempted from Central Excise Duty as also import of all capital goods, raw materials, consumables, & reference standards for R&D purposes must be fully exempted from customs duty & other related duties.
The Third proviso to section 10B(1) restricts the deduction under this section upto assessment year 2012-13. By denying the deduction from the assessment year 2013-14, companies who have invested substantial amounts in EOUs with the belief that deductions will be available for 10 consecutive years will be adversely hit. Government can give relief to EOUs which they legitimately deserve by deleting the said Proviso. Therefore, it is suggested that the provisions of section 10B should be continued without any time limit. We request and expect that the weighted deduction of 200% of R&D expenses in an in-house facility will be extended for further period of 5 years.
Also, a weighted deduction of twice the expenditure on scientific research incurred by a company is allowed. With increasing volume of exports all over the world, our companies need to invest substantial amounts in registration of products overseas. Hence, expenditure eligible for weighted deduction should also include expenditure on product registration in foreign countries and consultants’ fees for patent/product registration overseas.
At present, weighted deduction is not available towards land and building. However, for carrying out modern day research, pharmaceutical companies need state-of-the-art facilities. Several leading companies carry out the research at the locations exclusively designated for the purpose. This requires infusion of huge funds on purchase of land and on construction of buildings specially designed for research. Therefore, it is imperative that such companies are also granted the weighted deduction on the expenditure incurred on land and building since such expenditure constitutes a significant amount of the total amount spent on the R&D.
Also pharma companies having their own approved R&D facilities have to get bio-equivalence study through outside agencies before they launch their products in the market. Since these expenses are an integral part of the R&D activity, they should also be made eligible for the weighted deduction even though they are incurred outside the R&D facilities.
Similarly import of reference standards should be totally exempted from customs duty, CVD etc.
Similarly, some samples of their medicines are provided to the medical doctors as “Physician’s samples” to gauge their efficacy. These must be kept out of purview of all duties and taxes.
The last few Budget presentations have overlooked the pharma industry, whose capability in providing affordable quality medicines is recognised globally. This year we expect the dynamic and forward thinking new Government to create a transparent atmosphere of confidence and trust and provide suitable incentives and concessions to keep our growth momentum going. We are confident that the principle of “less Government and more Governance” as spelt out by our Prime Minister Narendra Modi will do the magic.
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Daara B Patel is the Secretary-General, Indian Drug Manufacturers’ Association (IDMA)
There is a fundamental shift in the business model of Indian pharma companies from business driven research to research driven business. Considering the long term benefits of R&D to the economy at large, all excisable goods used for R&D purposes should be exempted from Central Excise Duty as also import of all capital goods, raw materials, consumables, & reference standards for R&D purposes must be fully exempted from customs duty & other related duties.
The Third proviso to section 10B(1) restricts the deduction under this section upto assessment year 2012-13. By denying the deduction from the assessment year 2013-14, companies who have invested substantial amounts in EOUs with the belief that deductions will be available for 10 consecutive years will be adversely hit. Government can give relief to EOUs which they legitimately deserve by deleting the said Proviso. Therefore, it is suggested that the provisions of section 10B should be continued without any time limit. We request and expect that the weighted deduction of 200% of R&D expenses in an in-house facility will be extended for further period of 5 years.
Also, a weighted deduction of twice the expenditure on scientific research incurred by a company is allowed. With increasing volume of exports all over the world, our companies need to invest substantial amounts in registration of products overseas. Hence, expenditure eligible for weighted deduction should also include expenditure on product registration in foreign countries and consultants’ fees for patent/product registration overseas.
At present, weighted deduction is not available towards land and building. However, for carrying out modern day research, pharmaceutical companies need state-of-the-art facilities. Several leading companies carry out the research at the locations exclusively designated for the purpose. This requires infusion of huge funds on purchase of land and on construction of buildings specially designed for research. Therefore, it is imperative that such companies are also granted the weighted deduction on the expenditure incurred on land and building since such expenditure constitutes a significant amount of the total amount spent on the R&D.
Also pharma companies having their own approved R&D facilities have to get bio-equivalence study through outside agencies before they launch their products in the market. Since these expenses are an integral part of the R&D activity, they should also be made eligible for the weighted deduction even though they are incurred outside the R&D facilities.
Similarly import of reference standards should be totally exempted from customs duty, CVD etc.
IDMA's Daara B Patel
Similarly, some samples of their medicines are provided to the medical doctors as “Physician’s samples” to gauge their efficacy. These must be kept out of purview of all duties and taxes.
The last few Budget presentations have overlooked the pharma industry, whose capability in providing affordable quality medicines is recognised globally. This year we expect the dynamic and forward thinking new Government to create a transparent atmosphere of confidence and trust and provide suitable incentives and concessions to keep our growth momentum going. We are confident that the principle of “less Government and more Governance” as spelt out by our Prime Minister Narendra Modi will do the magic.
____________________________________________________________________________________________________
Daara B Patel is the Secretary-General, Indian Drug Manufacturers’ Association (IDMA)