Budget 2024: Pharma sector may see higher allocations as govt aims to make India an innovation hub

Strengthening the R&D capability of India’s $50-billion pharma sector is vital for its value-led future growth

Finance Minister Nirmala Sitharaman is expected to announce more measures in the Union Budget 2024-25 to strengthen the research and development activities in the pharmaceutical sector.

Sitharaman in her previous budget speech on February 1, 2023, highlighted the key role of India’s pharma sector and R&D activities.

To bolster R&D, the minister announced a new programme to encourage research and innovation in pharmaceuticals through centres of excellence.

She had said that the industry would also be prodded to invest in R&D in specific priority areas as India looks for self-sufficiency (Atma Nirbhar) in the pharma sector, especially in manufacturing of active pharmaceutical ingredients (APIs).

Against the background of the budget announcement, the government in September this year launched a new policy on research and development and innovation in the pharmaceutical and MedTech sector.

Eyeing the transformation of the Indian pharma and Medtech sector from a cost-based to a value and innovation-based industry, the policy seeks to pit India as a high-volume, high-value player in the global pharma market and meet the quality, affordability and accessibility goals.

The scheme envisages the development of affordable, accessible solutions for primary areas of health concern, the launch of commercially viable products that will speed up the pharma sector’s growth and promote industry-academia linkages and collaboration between the private sector and state-run institutes.

Besides, a scheme with a capital outlay of Rs 5,000 crore was also approved as part of the policy to give a boost to R&D in the pharma and medtech sector.

Under the scheme, a Rs 700 crore plan has been prepared for setting up seven centres of excellence at the National Institute of Pharmaceutical Education & Research (NIPER). The centres will be set up in pre-determined areas.

A budget of  Rs 4,250 crore has been to encourage research in six priority areas like new chemical entities, anti-microbial resistance and complex generics, including biosimilars, medical devices, stem cell therapy and orphan drugs.

The large entities, MSMEs, SMEs and startups working with government institutes will get financial assistance for both in-house and academic research.

Strengthening the R&D capability of India’s $50-billion pharma sector is vital for its value-led future growth. The country’s pharma industry is the third largest in the world by volume. The pharma industry can potentially grow to $120-130 billion over the next ten years on the back of innovation and discoveries.