Finance Minister Nirmala Sitharaman’s Budget for 2023-24 has made several provisions to support the pharma & healthcare sectors not only in terms of expenditure but also to support R&D. India is a country where out-of-pocket expenditure on healthcare is high and a large part of the population incurs catastrophic health expenditures every year. This is slowly changing.
While almost half of all healthcare-related spending in India comes directly from patients at the point of treatment, we are witnessing a downward trend. A rise in the government’s share of spending on healthcare between FY14 and FY19 has coincided with a decline in out-of-pocket expenditure as a percentage of total health expenditure, according to the latest Economic Survey. This is good news.
Budget’s Health Sector Focus
Budgetary allocation for healthcare in FY24 has gone up by 13 per cent to Rs 89,155 crore. Of this, Rs 2,980 crore has been earmarked for health research, while the balance Rs 86,175 crore will be utilised for centrally sponsored schemes and establishment expenditure.
Given the recommendation of the National Health Policy 2017 to increase public healthcare expenditure to 2.5 per cent of GDP by 2025, the outlay seems to be gradually trending towards the target. Central and state governments’ budgeted expenditure on the health sector had reached 2.1 per cent of GDP in FY23 (Budget Estimates).
To address the shortage of nurses in the country, the Budget has done well to announce the setting up of 157 new nursing colleges. Trained human resources are critical for achieving better outcomes and increasing access to high quality healthcare in India.
The mission to eliminate sickle cell anaemia by 2047, which will involve screening, awareness creation and counselling, was also a key announcement in this year’s Budget.
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What Pharma Industry Needs
The Indian pharmaceutical industry needs to focus on emerging opportunities across novel biologics, biosimilars, mRNA and other new-generation vaccines, orphan drugs, anti-microbials, precision medicines, cell and gene therapies, which account for two-thirds of the global pharma value pool. Developing these new, cutting-edge therapies is a complex and lengthy process. The scientific, technical and regulatory bars are considerably higher, making drug development difficult, more time consuming and very expensive.
Exponential investments in R&D, manufacturing and digital transformation are needed for this transition up the pharmaceutical innovation value chain. The Indian pharma industry has for long been urging the government to prioritise schemes that boost research in these “moonshot” areas.
Good First Steps
The Finance Minister has sought to address some of the pharma and healthcare industry’s demands by announcing a new programme for promoting research and innovation in pharmaceuticals through Centres of Excellence. The encouragement offered to the industry to invest in R&D in specific priority sectors is also very welcome and the industry awaits the details of the incentives to be announced.
The opening of select ICMR (Indian Council of Medical Research) laboratories for research with public and private medical faculties is a positive move to enhance industry-academia linkages. The proposal for “dedicated multidisciplinary courses” for medical devices will ensure availability of skilled manpower.
The proposed Centres of Excellence for Artificial Intelligence could lead to healthcare innovations that offer patients in India more personalised risk assessments, diagnoses, and treatments.
India has already established itself as the “Pharmacy of the World”. The Budget announcements on pharma research are much-needed steps that can eventually lead to transforming India into the research, innovation and bio-manufacturing hub of the world.
Kiran Mazumdar-Shaw is Executive Chairperson, Biocon & Biocon Biologics. Views are personal and do not represent the stand of this publication.
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