Budget 2024: Pharma Industry Seeks Tax Benefits and Intellectual Property Rights Regime to Boost Growth

The pharmaceutical industry is urging the government to introduce tax benefits and an effective intellectual property rights regime to boost research and development (R&D) investments, accelerate innovation, and drive growth. According to the Organisation of Pharmaceutical Producers of India (OPPI), the sector needs incentives to undertake essential research and development, including clinical trials and patent registration.

OPPI Director General Anil Matai emphasized the need to incentivize R&D investments by providing deductions on R&D expenses, research-linked incentives for multinational companies (MNCs), and corporate tax concessions. He suggested extending the scope of section 115BAB of the Income Tax Act, 1961 to companies solely engaged in pharmaceutical research and development, and offering a 200% deduction rate on R&D expenditures. This would significantly boost the sector’s ability to undertake research and development, including clinical trials and patent registration.

Matai also stressed the importance of establishing an effective intellectual property rights regime to drive growth and encourage research-based pharmaceutical companies to introduce innovative therapies in India. He sought incentives for centers and companies that provide specialized training programs for pharmaceutical employees and the introduction of incentives for developing treatments for rare diseases.

To improve patient affordability, Matai recommended expanding the list of life-saving drugs eligible for Goods and Services Tax (GST) and import duty exemptions, including all oncology medications. Additionally, he suggested providing incentives for investments in bonds issued by pharmaceutical companies to attract investment and contribute to a more resilient and future-ready pharmaceutical industry.

The Indian Pharmaceutical Alliance (IPA) Secretary General, Sudarshan Jain, echoed similar sentiments, emphasizing the need for policies that leverage the industry’s knowledge-driven foundation and status as a global manufacturing hub. He emphasized the importance of quality and innovation, given the high risk, lengthy development periods, and low success rates in research. Jain urged the government to introduce policies that provide direct and indirect tax benefits to encourage research and investment in becoming a global benchmark in quality.

The IPA represents leading research-based pharmaceutical companies in India, including Cipla, Dr Reddy’s Laboratories, Sun Pharma, and Lupin. The industry is seeking a policy direction that recognizes the high-risk, long-gestation nature of R&D and provides continuous investment to ensure the sector’s growth and development.

In conclusion, the pharmaceutical industry is seeking a comprehensive approach to boost R&D investments, accelerate innovation, and drive growth in the sector. The government is urged to introduce tax benefits, an effective intellectual property rights regime, and policies that encourage research and investment to make the sector a global benchmark in quality.

Historical Context:

The pharmaceutical industry has been a significant contributor to India’s economy, with the country being one of the largest producers of generic medicines in the world. The industry has faced challenges in recent years, including the impact of the COVID-19 pandemic, increasing competition from generic manufacturers, and the need to invest in research and development to stay ahead in the global market. In 2020, the Indian government introduced the Production Linked Incentive (PLI) scheme to boost domestic manufacturing and exports of pharmaceuticals. However, the industry has been seeking more comprehensive policies to support research and development, innovation, and growth.

Summary in Bullet Points:

• The pharmaceutical industry is urging the government to introduce tax benefits and an effective intellectual property rights regime to boost research and development (R&D) investments and drive growth. • OPPI Director General Anil Matai recommends providing deductions on R&D expenses, research-linked incentives for multinational companies, and corporate tax concessions to incentivize R&D investments. • Matai also suggests establishing an effective intellectual property rights regime to drive growth and encourage research-based pharmaceutical companies to introduce innovative therapies in India. • The industry is seeking incentives for centers and companies that provide specialized training programs for pharmaceutical employees and the introduction of incentives for developing treatments for rare diseases. • To improve patient affordability, Matai recommends expanding the list of life-saving drugs eligible for Goods and Services Tax (GST) and import duty exemptions, including all oncology medications. • The Indian Pharmaceutical Alliance (IPA) Secretary General, Sudarshan Jain, emphasizes the need for policies that leverage the industry’s knowledge-driven foundation and status as a global manufacturing hub. • Jain urges the government to introduce policies that provide direct and indirect tax benefits to encourage research and investment in becoming a global benchmark in quality. • The industry is seeking a policy direction that recognizes the high-risk, long-gestation nature of R&D and provides continuous investment to ensure the sector’s growth and development. • The government is urged to introduce a comprehensive approach to boost R&D investments, accelerate innovation, and drive growth in the sector.