The country’s pharmaceutical industry is looking to the budget later this month for incentives that could help industry consolidation to stop small firms from undercutting large ones, and also an export boost to help it bear the cost of developing new drugs or copycat generic versions of medicines going off-patent.
Pharma companies spend anything between $1 and 5 million on developing each generic molecule and even small pharma firms on an average export 40 per cent of their production, while bigger firms do 65 per cent.
“If companies are unable to recover cost of development from global sales, the entire burden of development will fall on the sale in the domestic market,” said D.G. Shah, secretary-general of the Indian Pharmaceutical Alliance (IPA).
The IPA has written to the government seeking clubbing of all accumulated losses, accrued tax and other benefits by the acquirer company where a firm is acquired. It also seeks exemption from duties and levies to aid M&A.
Other demands include extension of fiscal incentives for research and development to at least 10 years and allowing higher deduction of R&D expenses for tax calculations and a cut in excise duty on drugs that contain alcohol.
Gaurav Khungar, head for pharmaceuticals at consulting firm KPMG said the government must lengthen the list of life-saving drugs that enjoy concessional 5 per cent customs duty.
The Indian Drug Manufacturers Association has asked for increasing the minimum service tax exemption limit for small industries to Rs 25 lakh from Rs 10 lakh.