Not a reason enough to smile?

PHARMA: Despite sops and fund allocation for healthcare, Budget 2007 has evoked mixed reactions from industry players.

Though the general attitude spells pleasure and reassurance, there is a hint of disappointment within the Indian pharmaceutical industry following the announcement of the Budget 2007.

With an overall increase in the allocation of funds towards healthcare, focus on anti-AIDS programme and immunisation programmes and the 150 per cent weighted deduction available for expenditure on research and development in pharmaceuticals for another five years, the Finance Minister has clearly shown a keen interest in building India's healthcare. However, pharma players insist this is not enough.

Though the industry applauds the effort to eradicate Polio and bring HIV/AIDS under the scanner with its anti-AIDS programme, it adds in the same breath that with the actual number of positive people being close to 25 million as compared to the official figure of almost six million, healthcare needs more funds and waivers.

Ranjit Shahani, vice chairman and MD, Novartis India, and president of the Organisation of Pharmaceuticals Producers of India, outlines three primary objectives that need to be the focus of any economy's healthcare "" affordable and easily accessible healthcare, impetus for R&D and global expansion of the pharma industry.

While the pharma industry had expected zilch import duties on life saving drugs, a cut on duty bringing it down to 8 per cent so as to reduce transaction cost of the product and a 10 year holiday from weighted average tax for R&D expenses, the outcome of the budget has shown mixed reactions.

Vaccine companies like Panacea Biotech are thrilled with the Budget that gives their Polio vaccines a boost through the immunisation programme.

Rajesh Jain, joint MD, Panacea Biotech, says, "For us, the consumption will go up and so, as a vaccine producer we are set to benefit from the announcement. Even the five year tax holiday in R&D has come at a good time for us since we are launching our fifth R&D centre in September this year."

Others like Ranbaxy that rely heavily on clinical trials and R&D are also happy with the Budget since it brings down costs for them. Malvinder Mohan Singh, CEO and MD, Ranbaxy, says, "The incentives will enable vital research work to continue within the country in a stable environment and will help to deliver a sustainable Indian advantage in this sunrise sector."

However, pharma companies like Novartis and Glenmark Pharma, which have R&D facilities as well as drug manufacturing facilities find that the Budget did not live up to their expectations.

Explains Shahani, "For Indian pharma to go fully global, we require a Food and Drug Administration approved plant, which is still missing. Plus, it takes almost 10 to 15 years to develop a molecule in R&D and the five-year tax holiday does nothing to benefit us."

Though of a similar view, Glenmark's MD & CEO, Glenn Saldhana, is a little more optimistic. "We were hoping that there would be significant incentives to stimulate R&D in India. However, while we expected more, we are glad that the R&D 150 per cent tax incentive will continue for an additional five years," he says. Then again, there is always the next year.