Business

Budget: Pharma industry seeks incentives for R&D, conducive policies

• By Newsdesk
• New Delhi
• Jul 05, 2024

Business

In a bid to expand India's pharmaceutical industry to $120-$130 billion by 2030 and increase its global market share to 7%, the Indian pharmaceutical sector is seeking more government incentives to boost investments in research and development (R&D). The industry's goal is to not only enhance its export markets but also achieve long-term self-reliance.

Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance, emphasized the need for an ecosystem and policies that encourage greater R&D investment and innovation, improve quality standards, and increase market accessibility for exports. He stated, "This will reinforce India’s position as the top producer by volume and one of the top three by market value by 2047.”

Currently valued at $50 billion with a global market share of 3.6% by value, the industry is expected to see domestic market revenue reach $13.16 billion in 2024, growing to $16.56 billion by 2029 at a compound annual growth rate (CAGR) of 4.70%, according to Statista.

India is the world's largest producer of generic drugs, supplying 20% of global generics volume to over 200 countries, and 60% of the global vaccine requirement. The sector contributes about 2% to India’s GDP and provides employment for approximately 3.5 million people.

The Organisation of Pharmaceutical Producers of India (OPPI), representing global research-based pharma firms in India, is optimistic about policy reforms to boost innovation and streamline regulatory processes. Anil Matai, Director General of OPPI, suggested extending tax benefits under section 115BAB of the Income Tax Act, 1961, to pharmaceutical research companies and providing a 200% deduction on R&D expenditures.

Matai also emphasized the need for a robust intellectual property (IP) rights regime to drive growth and attract research-based pharma companies to introduce innovative therapies in India. Nikhil Chopra, CEO and Whole-Time Director of JB Pharma, highlighted the importance of strengthening the IP framework to incentivize groundbreaking research and the development of new life-saving drugs.

The central government has initiated several measures to make India self-sufficient in active pharmaceutical ingredients (API) and key starting materials (KSM), such as the Production Linked Incentive (PLI) schemes. Additionally, the government has revised Schedule M under the Drugs and Cosmetics Act, 1940, to enhance pharmaceutical manufacturing quality practices and launched the Promotion of Research and Innovation in Pharma MedTech Sector (PRIP) scheme.

Dr. Arunish Chawla, Secretary of the Department of Pharmaceutical (DoP), announced the establishment of an internal project monitoring unit to identify eligible projects for the PRIP scheme, aiming to boost research and innovation. He noted the rapid growth of the med-tech industry and predicted that India will significantly reduce its export-import gap in this sector within five years.

To attract investment and build a more resilient pharmaceutical industry under the Atma Nirbhar Bharat initiative, industry experts call for incentives for investments in bonds issued by pharmaceutical companies. The new Narendra Modi-led government’s policy measures and regulatory interventions are seen as crucial for driving this growth.