Budget 2021 could be the vaccine for the pharmaceutical industry

The pharmaceutical and life science sector has played a pivotal role during this ongoing pandemic which has shook the world economy, India being no different. Being an essential sector, it actually rose to the occasion — first in identifying and supplying medicines to control the breakout. Thereafter, the innovators combined with global support are now providing India the vaccines to bring back the economy.

However, what became clear is that innovation is critical in current times. Also, given some level of self-reliance that most countries are now thinking on, it is important that India also looks at this closely.

Although COVID-19 disruptions caused the life science, healthcare and pharmaceutical industry to react to everyday challenges, the element of self-reliance in these sectors was visualised by the Government of India. With a vision to make India self-reliant, the Centre has launched the medical park and production linked incentive (PLI) scheme for promotion of domestic manufacturing of critical Key Starting Materials/Drug Intermediaries and Active Pharmaceutical Ingredients (APIs).

However, for India to be self-reliant, this needs to be further augmented with other areas also being considered. These are:

• It is more important for India to be participating in the innovation at a global level. While a PLI kind of scheme can be considered, it may be equally important to also consider tax incentives to attract innovation — say a 200 percent tax deduction can be brought back.


• This sector should be moulded like the electronics sector where the government has not only attracted global players, but it has also helped enable an ecosystem to augur well. An interaction with industry and global players would do well to make India move from the generic manufacturer to a global innovator and manufacturer.


• The government has done well during the pandemic to adopt technology, such as the Arogya Sethu app. Digital health records will be of greater focus this year. This will help it move in the right direction to build the much-expected universal healthcare framework for India.

The above are in addition to the schemes already introduced as part of Budget 2020 such as the PPP model for hospitals, setting up of infectious disease hospitals in all districts, etc.

Further, the government may also look at introducing stable pricing and a policy environment favourable for long-term investment decisions. Decisions must be made to reduce the dependency on China for APIs, which still constitutes a major portion of API imports for India. An increase in public and R&D spending will also go a long way.