Budget '06: Pharma sector seeks relief

Mumbai: As more and more Indian and multinational drug companies source their intermediates and bulk drugs from neighbouring China, many mid- and small-sized companies in the Indian industry is faced with a threat of survival.

That's because naptha - a key feedstock for all chemical units - is imported into China at 0 per cent duty against the 10 per cent import duty imposed in India

At a time when Indian Drug companies are facing tough challenges from China, the industry is lobbying hard for duty cuts on important raw materials, and better access to affordable life saving medicines.

Since indian units are largely dependent on imported naptha, the companies lose out to China in the international markets.

Industry experts have, therefore, appealed to the Union Finance Ministry to cut the import duty on naptha so that the bulk drug industry can compete and grow.

Says D G Shah, Secretary General of IPA, "We have urged the Government to consider that the duty on naptha is reduced in this Budget. I consider this very important in terms of long-term competitive edge of the Indian pharma industry. And if you don't do it, it has consequences that we may lose out to China in the long term."

Besides, the Indian drug industry expects the Government to support long-term research costs incurred on clinical trials, drug development and also international patent filings.

Industry lobbies have suggested that weighted deduction of 150 per cent may be extended up to 2017. The industry also feels that physician's samples given to a medical rep should not be treated as a perquisite and charged FBT.

Explains Ranjit shahani, Vice-Chairman of Novartis, "We are expecting that the Finance Minister will reduce excise duties from 16 per cent to 8 per cent. For life-saving drugs, the import duty will be made zero. And of course, the FBT is an old pending situation for the industry. And we are hoping that the Finance Minister will lokk at it very pragmatically."

The drug industry also expects measures for better health infrastructure so that life-saving medicines could reach out to the poorer sections. A long-pending proposal to cut excise on medicines from 16 per cent to 8 per cent may also come through this budget.

While it will be crucial to meet the demands of the Indian drug industry, the finance ministry will have to take more concrete measures to ensure that life-saving medicines become cheaper and more accessible.