Budget Series 2017-18 #8 Impact on Pharma Sector

By Manisha Sharma & Gandhali Inamdar

“I would have expected some pro-pharma industry measures in terms of incentives to research and some tax relief. Quality healthcare for India would be better served with a greater focus towards accessibility and availability of healthcare services and infrastructure,” said Murtaza Khorakiwala, MD of Wockhardt.

 “The Government has shown its clear intent towards fast-tracking inflow of FDI, and the scrapping of the Foreign Investment Promotion Board (FIPB) is a credible step going a long way in supporting the objective of ease of doing business”, Glenn Saldanha, CMD, Glenmark Pharmaceuticals said.

The industry expected not only fiscal incentives but also certain regulatory provisions; given the Government’s vision of making India one of the top-three pharmaceutical markets by 2020. The Budget has not specifically addressed imminent challenges directly affecting the sector.

Key Doses Prescribed:

1. A corpus of Rs.500 crores have been allocated for Mahila Shakthi Kendras
2. Under a nationwide scheme for pregnant women, Rs.6000 will be transferred to each person
3. A sum of Rs.1, 84,632 crores would be allocated for women and children welfare and nutrition
4. Government has prepared an action plan to eliminate Kala-Azar and Filariasis by 2017, Leprosy by 2018, Measles by 2020 and Tuberculosis by end of 2025
5. Swachh Bharat mission has made tremendous progress; sanitation coverage has gone up from 42% in Oct 2013 to 60% till date
6. Health sub-centers, numbering 1.5 lakhs, will be transformed into health wellness centers
7. Two new All India Institutes of Medical Sciences (AIIMS) have been proposed to be set up in states of Jharkhand and Gujarat
8. Government will undertake structural transformation of the regulatory framework of medical education and create additional 5,000 PG seats every year to ensure adequate availability of specialist doctors thereby strengthening secondary and tertiary levels of health care
9. Aadhaar-based smartcards will be issued to senior citizens to monitor health and enable ease of access to health services
10. In addition to the price of coronary stents being already brought under control, finance minister Mr. Jaitley also said that new rules are being formulated for medical devices, which will help in reducing costs of such support devices. “These rules will be internationally harmonized and will attract both domestic and foreign investment into this (medical devices) sector,” the minister said in his budget speech
11. The Budget emphasized on promoting the use of generic drugs by medical practitioners. Since Mr. Jaitley did not specify details in his budget speech, pharma industry experts believe the government is considering making prescription of generic drugs mandatory. This hasn’t gone down well with pharma companies as it will call for drastic changes in their marketing and pricing strategies
12. The budget has indicated possible near future modifications in Drugs and Cosmetics Rules (DCRs) bringing in a large section of the population within the gambit of affordable medical care and institutionalize the domestic healthcare sector

What got missed?

Unfortunately, the Budget completely overlooked the health-tech start-ups which are changing the landscape of healthcare industry in India. Also, no tax relaxations were announced for generic drug manufacturers as anticipated.

The Road Ahead

India is one of the fastest growing markets for healthcare in the world, and hence it is important that the country starts to design and manufacture its own medical devices and formulate its generic drugs that are best in class following international standards in quality and compliance. This will not only ensure patient safety but also make the domestic industry globally competitive.