Drugmakers let down on absence of research incentives

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Drugmakers let down on absence of research incentives

Despite the constant mention of “knowledge” in Budget ‘08, the big daddies of the pharmaceutical industry are unhappy that it did not translate into anything tangible for companies embarking on knowledge-based research initiatives.

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Mumbai/Chennai, March 2

Despite the constant mention of "knowledge" in Budget '08, the big daddies of the pharmaceutical industry are unhappy that it did not translate into anything tangible for companies embarking on knowledge-based research initiatives.

The 125 per cent weighted deduction given to companies that outsource research will bring some cheer to drug-makers. Pharmaceutical companies cannot do everything in-house, and have to outsource some of their research, clinical trials and toxic studies done on animals, said Mr D.G. Shah of the Indian Pharmaceutical Alliance, a platform for large domestic drug-makers. But it is unfortunate that the benefit given for outsourced research was not put on par with the 150 per cent weighted deduction given to in-house research, he added.

Also, no direction was given on research, with the 100 per cent income-tax exemption for research ending in April 1, 2007, he pointed out. Drug companies focusing on research, for example the several de-merged research entities, have been left in the cold.

Research-related incentives featured prominently on the pre-budget agend as placed before the Finance Minister by both companies and the pharmaceutical industry. The halving of excise duty to eight per cent only defeats the Government's objective to develop backward areas, he observed. The incentive was to take companies and employment to areas that required development and this gets muted, he said.

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