Mumbai: The pharmaceutical industry wants the forthcoming Union Budget to grant incentives to boost exports and extend the scope of tax breaks given for research and development work.
Last year’s budget extended tax breaks of up to 150% of a firm’s research expense to 2012. Currently, only companies doing in-house research are eligible for this.
These sops should be extended by another five years to 2017, said a note from the Organization of Pharmaceutical Producers of India (OPPI), largely a group of research-led multinational firms. Tax breaks should also be given to drug firms involved solely in R&D and should cover all expenses incidental to basic research, including clinical trials, done in India or abroad, said a note from the Federation of Indian Chambers of Commerce and Industry (Ficci).
Swati Piramal, director of Strategic Alliances and Communications at Nicholas Piramal India Ltd
“This will catalyse the R & D industry, the innovation-based industry, which is completely lacking in India,” said Swati Piramal, director of Strategic Alliances and Communications at Nicholas Piramal India Ltd.
“Pharma spends 10 times as much as the IT or auto industry and the research takes 10-12 years,” she said. “So five years is not enough in an industry where 10-12 years is the gestation period.”
Firms such as Ranbaxy Laboratories Ltd, Dr. Reddy’s Laboratories Ltd, Sun Pharmaceutical Industries Ltd, Nicholas Piramal and Wockhardt, have either spun off or are planning to spin off their R&D wings. Being a net exporter, the industry has taken a beating due to the rupee’s rise, which gained more than 12% against the dollar in 2007.