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Drug makers seek Modicin to get back into pink of health

Friday, 27 June 2014 - 6:45am IST | Place: Mumbai | Agency: dna
Want the govt to address the 'largely ignored' segment in this year's budget

Last fiscal was a difficult one for Indian drug makers as they had to battle on various fronts.

While they faced new drug pricing policy and trade-margin issues in the domestic market, the European market remained stressed on the exports front.

Making matters worse, a rising number of Indian companies and even local plants of international drugmakers recently came under the US Food and Drug Administration (FDA) scanner.

Amid this, the sector, called 'pharmacy to the world', had remained neglected in the last few union budgets, say industry captains.

"Successive governments have largely ignored the pharma & biotech sector in their budgets. Over-regulation, over-taxation, under-incentivisaton and under-investment have steadily eroded the sector's global competitiveness," Kiran Mazumdar-Shaw, chairperson and managing director, Biocon, said.

According to Glenn Saldanha, CMD, Glenmark Pharmaceuticals, for long the budget has been a non-event for the pharma sector.

"We would want this to change and the sector should be given its due importance."

Experts said the industry is facing a series of issues from delay in clinical trial approvals and new-product approvals to the government's stand on the patent issue.

Mazumdar-Shaw said, "India must clearly enunciate the rules governing patentability for pharma products. Our stand on IP laws that discourage ever-greening of patents is gaining acceptance. We have also adopted a thoughtful pre-grant patent opposition, which should serve to protect us from frivolous patents. However, we must ensure that we demonstrate our commitment to legitimate patent protection."

Saldanha said among the main challenges was slow new-product approvals. "The government should look at speeding up new-product approval process; and at the same time ensure that quality, efficacy and safety aspects of medicines are not compromised," he said.

Also, imposition of price control on essential drugs in the domestic market also impacted the margins of the companies

"The imposition of price control on a large number of essential drugs has seen the replacement of a number of Indian bulk drugs with Chinese imports. This policy needs urgent amendment if we are to restore our supremacy in drug manufacturing," Mazumdar Shaw said.

Clinical research, also touted to have tremendous growth potential, has failed to take off in India due to fluid and inconsistent regulatory framework.

Saldanha said, "Clinical trials are extremely well regulated in the US or Western Europe. India should look at evolving its regulatory framework governing clinical trials to the high standards of the developed market."

Delay in approvals is the biggest hindrance for firms wanting to do clinical trials in India as wait can extend even up to 8-9 months.

"Nobody is doing clinical trials in India since it is so difficult to get permissions. It is rather easy for us to do it in Europe than wait for 7-9 months here. There is a time value, and from that perspective we would rather incur high costs than wait," said Nilesh Gupta, managing director, Lupin.

According to the Biocon chief, the regulatory process should replaced with time-bound "deemed approval" and "automatic approvals", which should be uniform across the land.

Another area of concern is foreign direct investment (FDI) in pharma which still requires some more clarity, despite the government announcing continuation of 100% FDI in brownfield projects early this year.

John J Castellani, president and CEO, Pharmaceutical Research and Manufacturers of America (PhRMA) said, "It is our hope that the government's new budget proposals will provide further incentives for FDI investment in pharmaceuticals, including further transparency and predictability in the approval processes, increased public spending on healthcare, and promotion of a strong innovation environment."

Mazumdar- Shaw, however, said, "The FDI policy on pharma needs to revert to the previous UPA1 regime which allowed automatic infusion of foreign equity of up to 100% in both greenfield and brownfield projects, so that it is not left to the government's discretion to introduce riders for clearing investment proposals."

The Organisation of Pharmaceutical Producers' of India (OPPI) has put forward a few recommendations, including rationalisation of excise duty rate for active pharmaceutical ingredients. Ranjana Smetacek, director general, OPPI, said, "Currently, the only tax benefit available for R&D activities is in the form of weighted deduction for in-house R&D. There are no specific tax benefits available to units engaged in the business of R&D or contract manufacturing." Similarly, the Association of Biotechnology led Enterprises (ABLE) has proposed elimination or substantial reduction in service tax, especially for overseas clients paying in foreign currency.

According to India Ratings and Research, withholding tax on royalty payments to non-resident pharma companies which currently stands at 25% may be revised downward for hassle-free knowledge transfer. "This will also enable the Indian subsidiary (of the patent-owning parent) or the contract manufacturing outfit to increase scale," it said.




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