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Drug sector sore over absence of sops for R&D

Staff Correspondent

MUMBAI: Although there were several hopes pinned on it, the Union Budget seems to have ignored the pharmaceutical sector. "I am surprised at the deafening silence on the pharmaceutical and healthcare sectors in the budget,'' said Habil Khorakiwala, Chairman, Wockhardt Group. "My biggest disappointment is that there is nothing in the budget to promote R&D despite specific demand from the industry to increase the weighted deduction and to have it for 10-15 years."

D. G. Shah, Secretary-General, Indian Pharmaceutical Alliance (IPA), said "from a measly Rs. 150 crore in 1995, R&D today is Rs. 1,500 crore in the pharma sector accounting for 8-12 per cent of sales. The government contributes only eight per cent of this by way of tax credit."

"The Minister is keen to reduce excise duty on Dosa to eight per cent from 16 per cent and on condensed milk to zero per cent. But medicines will continue to attract 16 per cent duty.

A reduction in excise would have made medicines more affordable to our people.

The budget is also silent on biotechnology which the minister had referred to as a sunrise sector in last year's speech,'' said Mr. Khorakiwala.

"There are two big ticket items the minister did not address for the pharma industry, namely, R&D and excise reduction,'' according to Ranjit Shahani, Vice Chairman and Managing Director, Novartis, and President, Organization of Pharmaceutical Producers of India (OPPI). "There was clearly a case for reduction of excise duty. First, transaction costs are high for pharma players and second, it will bring down the cost of access to medicine which is so important in our country."

However, on the positive side, the industry sees the removal of FBT on samples to doctors is a step in the right direction.

"FBT is meant to be a tax on perquisites to employees. By no stretch of imagination is a sample a perquisite anyway,'' said Mr. Shah.

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